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Pandemic 'stay at home stocks' like Peloton, Zoom, Roku tank on Pfizer vaccine news—is it an overreaction?

Pfizer on Monday morning announced that its experimental COVID-19 vaccine, developed in partnership with BioNTech, was more than 90% effective in studies and that it could distribute 50 million doses before the end of this year, and 1.3 billion doses in 2021.
The good news immediately sent U.S. markets broadly higher—especially airline stocks, energy names, bank stocks, in-person entertainment like theme parks, and real estate—except for a slew of key names that have seen huge gains during the pandemic, boosted by prolonged work-from-home trends.
Those “stay-at-home stocks” were hit hard.
Peloton (PTON) fell by as much as 25%; Logitech (LOGI) fell 19%; Zoom Video (ZM) dropped 17%; CrowdStrike (CRWD) fell 11%; Chewy (CHWY) fell 10%; Roku (ROKU) sunk 7%; Netflix (NFLX) fell 6%; Slack (WORK) was down 4%.
The market thinking appears to be: a widely available vaccine will prompt a return to normalcy, which will mean the end of the hockey-stick run for products and services you use in your home.
But that reductive logic doesn’t apply equally well to every stay-at-home name. Rather, the post-pandemic prospects for each business have to be examined on a case-by-case basis.

Remote work won’t abruptly end with a vaccine

Since early on in the pandemic, analysts and experts have predicted that some form of remote work is here to stay—after all, it was a trend already growing before the pandemic. If that’s the case, then many companies are going to continue to use enterprise tools like Zoom and Slack, even once offices reopen. Whether workers are in their office or at home, teams that use Slack aren’t going to just stop using it.
In Zoom’s case, the stock has also become extremely expensive. It trades at more than 800 times earnings, so it was arguably due for a big correction. The vaccine news provided an excuse for firms to take some profit and move into other names, like the battered stocks set to take off now that a vaccine is imminent. (As for Slack, increased competitive threat from Microsoft Teams is also contributing to its slide.)
The same “here to stay” thinking with the enterprise names can apply broadly to streaming services like Netflix and Roku: just because people might return to their offices doesn’t mean they will stop streaming at home.
In Roku’s case, the dip makes a little more sense, since Roku relies on ad revenue from ads on its home screen, and advertisers might indeed shuffle their budgets away from Roku if they think time spent on streaming will drop significantly. For Netflix, which makes its revenue from subscriptions (it doesn’t sell ad space or sell user data), the stock dive would only make sense if you think a significant number of subscribers will cancel Netflix after the pandemic.
Peloton is its own case: the exercise-bike company took off early in the pandemic amid staggering demand for its bikes, creating wait times of 5-10 weeks on orders. As the stock surged, some analysts warned of a “pull-forward in demand,” the idea that Peloton cannot sustain this level of sales and would be punished later on because shareholder expectations would get too high. But in its fourth-quarter earnings report in September, Peloton had its first profit and showed massive continued demand for its bikes, making the bear case look wrong. (Meanwhile, Netflix, in contrast, actually did see in Q3, and explicitly identified, a pull-forward in demand from the first half of 2020 that hurt its subscription adds.) Once gyms fully reopen across the country, will Peloton bike sales really dry up?
On the other hand, Peloton stock, like Zoom, got extremely expensive (trading at a 15x P/E ratio), so it was due for a correction as soon as there was any indication that the end of the pandemic is in sight.

Buy online, pick up in store

One good example of a trend accelerated by the pandemic that is generally expected not to reverse is e-commerce and the rise of BOPIS (buy online, pick up in store) for brick-and-mortar retail.
Walmart, Target, Best Buy, Urban Outfitters, Restoration Hardware, and Dick’s Sporting Goods are just some of the physical retail names seeing enormous e-commerce gains, so much so that the share of U.S. retail spending attributed to e-commerce has surged to 16.1%, up from 10.8% one year ago.
Those chains have also seen huge customer adoption of curbside pickup. Dick’s Sporting Goods president Lauren Hobart said in August that Dick’s “anticipated originally that we would see a large drop-off [in curbside] when the stores reopened, but that is not the case.” Many retail analysts predict that even after the pandemic, consumers will stick with their new behavior and shop online, for home delivery or curbside pickup.
Whole Foods CEO John Mackey disagrees—he thinks some people will stick to online ordering, but that it won’t remain the norm for most. Even if he’s right, what that creates is a hybrid landscape for physical retail and physical grocery.
The same applies to remote work: even if a large number of workers return to the office, many more workers than before the pandemic are going to keep working from home, which should be good for enterprise names like Zoom, Slack, and CrowdStrike.
Wharton professor Mauro Guillen writes in his new book, “2030: How Today’s Biggest Trends Will Collide and Reshape the Future of Everything,” that beyond the pandemic we should expect a “hybrid model” of working that allows for remote-work a few days a week, and continued automation of service warehouses.
“Most of what I hear from companies right now is that we're going to go to a hybrid model,” Guillen told Yahoo Finance in August. “So, a majority of American employees who are working from home now, they're saying, ‘Yes, I would like to have a remote component in my work week, but I would like to also go to the office.’”
Logitech CEO Bracken Darrell sounds a similar tune. He insists that the recent sales boom for Logitech’s computer accessories can’t be totally chalked up the pandemic, but to four “secular” shifts: “One is video going everywhere, whether it’s offices or webcams. The second one is the rise of gaming as a professional sport, and as a bigger and bigger spectator sport; it’ll be the biggest collection of sports in the world one day. The third one is working from anywhere. The fourth is everybody creating their own content and streaming it, which lends itself well to our microphones. All four of those are long-term secular trends.”
But of course, Darrell has to hope so for his business. The other companies labeled “stay at home names” during the pandemic are all hoping their momentum continues, even once we get a vaccine.
submitted by Brothanogood to stocks

NSA: We've learned our lesson after foreign spies used one of our crypto backdoors – but we can't say how exactly

It's said the NSA drew up a report on what it learned after a foreign government exploited a weak encryption scheme, championed by the US spying agency, in Juniper firewall software.
However, curiously enough, the NSA has been unable to find a copy of that report.
On Wednesday, Reuters reporter Joseph Menn published an account of US Senator Ron Wyden's efforts to determine whether the NSA is still in the business of placing backdoors in US technology products.
Wyden (D-OR) opposes such efforts because, as the Juniper incident demonstrates, they can backfire, thereby harming national security, and because they diminish the appeal of American-made tech products.
But Wyden's inquiries, as a member of the Senate Intelligence Committee, have been stymied by lack of cooperation from the spy agency and the private sector. In June, Wyden and various colleagues sent a letter to Juniper CEO Rami Rahim asking about "several likely backdoors in its NetScreen line of firewalls."
Juniper acknowledged in 2015 that “unauthorized code” had been found in ScreenOS, which powers its NetScreen firewalls. It's been suggested that the code was in place since around 2008.
The Reuters report, citing a previously undisclosed statement to Congress from Juniper, claims that the networking biz acknowledged that "an unnamed national government had converted the mechanism first created by the NSA."
Wyden staffers in 2018 were told by the NSA that a "lessons learned" report about the incident had been written. But Wyden spokesperson Keith Chu told Reuters that the NSA now claims it can't find the file. Wyden's office did not immediately respond to a request for comment.
The reason this malicious code was able to decrypt ScreenOS VPN connections has been attributed to Juniper's "decision to use the NSA-designed Dual EC Pseudorandom Number Generator."
The company has yet to clarify exactly why it made that decision. Juniper did not respond to a request for comment.
When former NSA contractor Edward Snowden leaked agency secrets in 2013, Reuters reported that years earlier security firm RSA, now part of storage biz EMC, had accepted a $10m contract with the NSA to use Dual Elliptic Curve, or Dual EC, encryption. RSA at the time denied some of the claims without disputing the existence of the contract.
The NSA had been keen to see Dual EC adopted and worked with the US Commerce Department to promote it. But in 2007, two Microsoft researchers reported there were serious flaws with the Dual Elliptic Curve Deterministic Random Bit Generator that led it to produce weak cryptography. By 2014, US standards agency NIST withdrew support for Dual EC.
Juniper at some point between 2008 and 2009 appears to have added Dual EC support to its products at the request of "a single customer," widely believed to be the NSA.
After Snowden's disclosures about the extent of US surveillance operations in 2013, the NSA is said to have revised its policies for compromising commercial products. Wyden and other lawmakers have tried to learn more about these policies but they've been stonewalled, according to Reuters.
The NSA also declined to provide backdoor policy details to Reuters, stating that it doesn't share "specific processes and procedures." The news agency says three former senior intelligence officials have confirmed that NSA policy now requires a fallout plan with some form of warning in the event an implanted back door gets discovered and exploited.
submitted by jpc4stro to cybersecurity

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