Pandemic-era winners lose their lustre

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Did the coronavirus shock usher in permanent changes to the business landscape or are traditional models reasserting themselves?

We reveal today how 50 corporate winners from the pandemic have lost roughly $1.5tn in market value since the end of 2020, as investors ditch the ecommerce, home entertainment and pharmaceutical stocks that rocketed during early lockdowns.

The losses come as the sharp acceleration of trends such as videoconferencing and online shopping during lockdown proves less durable than expected, as more workers go back to the office and high interest rates and living costs hit ecommerce demand. “Some companies probably thought that shock was going to be permanent,” said one economist. “Now they’re getting a painful bounceback from that.”

Video-conferencing company Zoom for example, whose shares soared as much as 765 per cent in 2020 as businesses switched to remote working, has been one of the biggest losers. Its stock has fallen 80 per cent since the end of that year.

Ecommerce groups Shopify, JD.com and Chewy, which initially thrived as online spending ballooned, have also suffered big losses. Shares in Shopify today dived 16 per cent after it swung to an unexpected loss in the first quarter, while Boohoo, the fast-fashion retailer behind brands such as Karen Millen and Debenhams, reported widening losses from “difficult market conditions, caused by high levels of inflation and weakened consumer demand”. The company has struggled as people return to in-store shopping. Luxury ecommerce is also affected and is undergoing serious consolidation.

Exercise-bike maker Peloton is another big loser, with shares down more than 97 per cent since the end of 2020. The company last week said chief executive Barry McCarthy would step down and it would cut 15 per cent of its workforce, the latest in a series of cost-saving measures.

TV streaming is another trend supercharged by the pandemic but now enjoying mixed fortunes. Netflix continues to thrive and Disney’s streaming business has turned its first profit since launching in 2019 but the outlook for the rest of the sector remains uncertain. The likely sale of Paramount Global marks it out as the streaming wars’ first big casualty, says the FT editorial board. 

Need to know: UK and Europe economy

UK construction activity grew in April at its fastest rate in more than a year, according to PMI survey data.

The UK suspects China was behind a cyber attack targeting the names and bank details of up to 270,000 current and former British military personnel.

John Swinney became the new first minister of Scotland after the resignation of former Scottish National party leader Humza Yousaf.

The US crackdown on banks financing trade in goods for Moscow’s war efforts is bearing fruit, making it much more difficult to move money in and out of Russia.

Does Germany bear some of the blame for Brexit? The head of the country’s Christian Democrat party blames the unwillingness of Berlin (and Brussels) to offer the UK real concessions on social policy before its pivotal EU referendum in 2016.

Will the European parliamentary elections change the EU? Join FT journalists for a subscriber Q&A on June 12 1200-1300 (GMT+1)

Need to know: global economy

Global trade growth is set to more than double this year as inflation eases and a booming US helps to drive activity, according to the OECD, IMF and World Trade Organization. Higher prices, surging interest rates and sluggish demand had led to a widespread slowdown in 2023.

Argentina’s central bank has put the country’s first 10,000-peso notes into circulation as it tries to streamline the nation’s cumbersome use of large heaps of cash following the collapse of its currency.

Donald Trump’s plans for a second term are those of a dictator, says chief economics commentator Martin Wolf. President Joe Biden’s only hope for re-election, Wolf argues, is to persuade American voters of his impressive record on the US economy.

Authorities are still “shooting in the dark” when it comes to counting the costs of long Covid. The condition — defined as symptoms that continue or develop three months after an initial infection, and last at least two months — has dealt a severe blow to health systems, with ripple effects on the wider workforce.

Need to know: business

Toyota, the world’s largest carmaker, forecast a 20 per cent drop in annual profit as it increases spending in electric vehicles and artificial intelligence to create a “game changer” to compete against Chinese rivals. VW brand chief Thomas Schäfer told the FT’s Future of the Car Summit that Brussels should not raise tariffs on Chinese cars imported into Europe, and doing so would risk “retaliation” against international brands in the country.

Chinese car dealers are ditching foreign brands slow to respond to the electric transition, while turning to domestic EV makers that are expanding at pace. Dealers are also adjusting to new ways of selling them.

Uber’s results were hit by costs from the ride-hailing company’s decade-long battle with global regulators. The San Francisco-based company reported operating profit of $172mn for the first three months of the year, compared with analysts’ forecasts for more than $600mn.

Italy is sending in troops to hunt wild boar in a new offensive to protect its €8.2bn prosciutto and sausage industry from swine fever. An estimated 1mn-1.5mn of the animals roam freely through the country, causing about €120mn of damage in rural areas from 2015 to 2021.

BP promised to cut costs by $2bn by the end of 2026 after first-quarter profit fell by more than expected. The oil major said it would focus on its portfolio of assets, taking out waste in the supply chain, digital transformation and relying more on “hubs” for IT and accounting services.

Can the partnership model of English retail bellwether John Lewis survive in a world of ruthless ecommerce? Watch our new film.

The World of Work

Millions of Britons are unable to work or are less productive because they are obese, according to a new report that suggests the condition helps to explain why economic inactivity rates due to sickness are at record levels.

Despite the backlash from US conservatives trying to undo the inclusion programmes introduced by American companies after George Floyd’s murder in 2020, there are signs that businesses have shrugged off the threat and are continuing with their plans for greater diversity.

In a special live edition of the Working It podcast, work and careers editor Isabel Berwick talks to consumer editor Claer Barrett on what she learned writing her new book, The Future-Proof Career.

The UK’s gender pay gap has hit its lowest recorded level but it will take at least 29 years before the earnings disparity between women and men is eliminated at the current rate of progress. The gap narrowed to 9 per cent in 2023-24 from 9.2 per cent a year earlier, according to FT analysis.

Ketamine, an anaesthetic with a reputation for being a party drug, is beginning to be used for mental health treatment and offered by companies as part of their benefits packages.

Some good news

An implantable heart pump could allow children with heart failure to wait at home until transplants are available rather than be tethered to devices during months-long stays in hospital.