This year has been interesting for investors. Many of last year’s winners — including companies that helped keep us connected and engaged through the pandemic — have proved mortal in 2021. However, we’re seeing even some of the names that seemed to be logical beneficiaries of the economy reopening falter this year.
Disney (NYSE:DIS), Uber Technologies (NYSE:UBER), and Match Group (NASDAQ:MTCH) are three household names that have declined in value this year, even as the major market indices have notched double-digit percentage gains. Not every stock climbs in a rising market, and more than 40% of U.S. exchange-traded listings are in the red this year. More than a quarter of the stocks have posted double-digit percentage declines in 2021. Let’s take a closer look at some of the surprising sinkers.
The loudest of high-fives when the economy started to get rolling again this year were probably exchanged in Disney’s boardroom. This is a company with the world’s leading theme parks, a strong niche with premium-priced family-friendly cruises, and movies that consistently top the box office. Its broadcasting arm fared well through the pandemic with folks sheltering in place, but naturally advertisers are willing to pay more now to reach viewers of ABC and ESPN when they know that consumers are open to spending money.
Disney stock is trading 15% lower in 2021, and it’s more than a little surprising. A knock on the media giant is that subscriber gains are slowing at Disney+, but it’s hard to be upset about a premium streaming service that has more than 118 million accounts within just two years of availability. With momentum building despite the sluggish share price, Disney is a prime candidate to turn things around in 2022.
It’s easy to see why Uber’s flagship personal mobility business slumped in 2020. Folks weren’t hailing drivers to take them to work, school, or social settings during the first few months of the pandemic. Uber Eats fared understandably well last year, but this is the year that both its original car-hailing business and its restaurant takeout delivery platform should’ve worked together to drive Uber higher. It didn’t happen. The stock is trading 14% lower in 2021.
The growth thesis has mostly played out as expected. Gross bookings hit an all-time high in last month’s third-quarter report, a 57% year-over-year surge. Reported revenue fared even better, up 72% to $4.8 billion. The year-over-year comparisons were going to be easy for its mobility segment, but the real surprise here is that its Uber Eats-led delivery segment saw its revenue nearly double over the past year. Uber Eats was able to boost its take rate considerably as it ramps up its offerings.
The red ink continues to be a problem, but the massive reported loss in its latest quarter was largely weighted by one-time markdowns for its equity investments. Uber did manage to return to positive adjusted EBITDA, and the road is clear for Uber to put the pedal to the metal in the year ahead.
When viable vaccines hit the market earlier this year, it should’ve been a dinner bell for Match Group. The online dating specialist with dozens of popular apps and sites claims that it accounts for roughly 60% of the relationships started online. It should’ve been a leader in 2022, but investors chose to swipe left on the parent company of Tinder. Match Group heads into the final trading week of the year with a 12% decline in 2021.
The bullish thesis that Match Group would benefit from the reopening has been validated. Revenue rose 25% in its latest quarter, and it’s well on its way to topping $3 billion in revenue for all of 2021. Most people are fine using the free features on dating apps, but the number of paying users across all of Match Group’s properties has risen 16% over the past year. Revenue per payer has risen by 6%.
Tinder is the top draw here, accounting for almost two-thirds of its premium users. It saw its direct revenue rise 20%, and the balance of Match Group’s other properties saw direct revenue soar 32%. Like some online dating profiles that aren’t as attractive once you dig deeper, Match Group hasn’t looked good on the bottom line. It has fallen short of Wall Street earnings targets in back-to-back reports, and margins contracted in its latest quarter. You still have to think that Match Group should’ve at least kept pace with the market in 2021. Investors may want to swipe right before the online dating leader bounces back in 2022.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.