My Pandemic Trades

ZM, PTON, SHOP, DDOG, ROKU

Anshil Bhansali, Jul 27, 2020

Here I will share my thought process, emotions and exit points of 5 trades I made during the unfortunate coronavirus pandemic. With a little bit of luck, patience, and emotional resilience, I was able to make huge profits from these trades.

Zoom - By now, I trust that every reader knows this company. I discovered Zoom during its IPO, and read a lot of great things about the founder and the company. The thing that caught my eye was its huge growth rate, and existent quarterly profits, which is unfound in today's world for high growth companies. Zoom IPO'd April 209, and I watched it rise from 36$ to 102$ over only a couple of months. Its first earnings report was coming up, and I had a hunch it would fall after its earnings as I thought it was overvalued at the time, and after it fell, I would jump in. It did fall to 90$, and thats when I bought my first tranche of ZM shares. This was August 2019. If you look at its share price for the next 6 months, youll see that the stock fell to a bottom of 60$. You can imagine how I was feeling on that investment. Yet, relentlessly, as it fell, I kept buying, and lowered my average cost to 75$ per share. Because I kept buying, my position got pretty big and scary. But I patiently held because I believed in the company. Come Feb 2020, coronavirus had the world locked down, and enterprise usage for Zoom soared, and so did the stock price. This was lucky for me. Once it hit 150$, I slowly started unloading and taking my profit. My average selling price was around 160$. Look at Zooms price now? its in $250 per share. What if I had held all along? Why did I sell early? I'll get back to why I was comfortable selling early.

PTON - Next trade, Peloton. This one I have to admit, was right in front of everyone. Peloton IPO'd right before the virus hit, and the IPO was lackluster. Again, the thing that caught my eye for the company was its high growth rate, extremely low churn rate, and low price-to-sales ratio. I entered a position around $26 per share around end of Feb 2020. If you look at the next entire month, you can see how it bottomed at $19, and mainly hovered in the high $20s. It had fallen due to a controversial advertisement , but I saw that as a buying opportunity. At its bottom, I was down 25% on this investment and it was excruciating. In all honesty, I did panic here, and was questioning my own judgement. But, as soon as I felt the stock could not go any lower than $19, I kept buying the stock while its share price was in the $20s. I poured some of my ZM profits into this opportunity. At this point, the world was already severely affect by coronavirus and the lockdown, and it was pretty obvious the pandemic was only helping Pelotons business. Yet, the stock was at an all time low for some reason. To me, this was the opportunity, and I just had to be patient. Soon enough, by May 2020, gyms officially closed, and PTON rose to $45. Along that rise, I started selling. My general rule for selling is once I achieve a 20% return on an investment, I consider selling. I had completely sold out of PTON around $45-50. Look at it now, its in the mid $60s. Again, I missed out on future profits.

SHOP - This was kind of a no brainer when the entire market fell 20% because of the pandemic. Shopify had fallen to $345 from a high of $540. For the longest time, I had been wanting to enter Shopify, but it was the kind of stock that 'just kept going up'. It was hard to find an entry point. This market crash was perfect. Within a matter of 2 weeks, the stock jumped 70% to $590, and I was ecstatic. I didnt sell early here, or atleast I thought I didn't. I waited longer, and started selling when my invesment in shopify doubled. My average return on this invesment was probably around 120%. Today Shopify is at $980.

DDOG - This is a company that most readers would probably not know of. Datadog is a tech SAAS company in the application monitoring space. Aside from its solid tech, it had great customer and revenue growth, upwards of 90%. This is one of the companies I can imagine as an acquisition target by big tech. I entered a position in Datadog around Jan 2020 around $41 per share. It hovered there for a while, and then the pandemic crash happened, and it bottomed at $31. I bought more, and held. This is one of my usual tectical bets where I truly believe in the company, so I didnt mind holding for a long time because I knew a rally would come. Held it right throughts its earnings where it rose to 65$ per share, and then to 80$ over the next week. My holding period here was about 4 months. At $75 a share, I had almost doubled my invesment, and I did feel it was overvalued, so I sold. Now, its around $90.

ROKU - Roku is a company that I have traded on and off since its IPO is 2017. My most recent trade with ROKU was during June 2020. Due to the pandemic, ROKU stock was beaten down to $105 per share because of concerns with the slowing advertising business . Advertising is one of Roku's primary revenue sources. In my head, I was thinking that the slowdown in advertising is temporary, and the economy will bounce back at some point. And I felt $105 per share made ROKU pretty undervalued. This feeling just come from watching the price move regularly. ROKU stock had previously reached $180 before. So, I was highly confident in this bet, so I invested a large amount, $40k. By July, Roku had risen (due to general business and google acquisiton rumors) to $155 per share, and I started taking my profits.

A common theme in all of these trades is that I sold early. What would have happened if I just held? My reasoning behind selling early is to use the profits for another opportunity. This way I am making more money from the money I have made i.e. compounding my returns. Maybe if I just held, I could end up with a bigger return. To find out, I maintain another portfolio where I only buy and hold. What do you think?