Could the reopening trade's success come at a cost?
Bank of America analysts brought that question into focus on Monday in a note upgrading Booking Holdings and downgrading Pinterest and Snap, citing changing tides on the interest rate front that could put a crimp on stay-at-home stocks' valuations.
"This is not a call that Snap or Pinterest will miss estimates," the note said. "This is a call that stocks could be range bound and we have better reopening ideas."
Booking Holdings finished trading down nearly 2.5% on Monday, backing off its all-time high set Wednesday. Pinterest fell nearly 1%. Snap lost less than half of 1%.
"We're … bullish on the reopening trade, but I guess where we would disagree with the report is that we don't think it comes at the expense of some of these higher-growth companies," Oppenheimer technical analyst Ari Wald told CNBC's "Trading Nation" on Monday.
Instead, it's likely to come at the expense of higher-dividend-paying, lower-volatility sectors, leaving Pinterest and Snap as the long-term winners, he said.
As for Booking Holdings, "it has mostly been trading in a very wide range — aside from that Covid collapse — between about $1,600 and $2,200 for much of the last four years," Wald said.
"Now, a year after the important market bottom, entering this second year of the bull market, we're seeing more stocks start to break out, Booking included, breaking above the upper end of that range," he said. "It can be considered more positive than not, as long as that breakout holds at $2,200 support."
Booking closed at $2,231.89 on Monday.
Challenges remain on both sides of Bank of America's call despite improving estimates around the reopening, Chantico Global founder and CEO Gina Sanchez said in the same interview.
"About 20% of travel is business related and 80% is leisure. Booking has about the same percentages in their revenues," she said. "If you assume that their entire revenue base is going to experience that kind of boost in 2021 and 2022, then Booking actually looks cheap. But if you assume that 20% of their revenue portfolio is going to lag, then actually, it just may be fairly valued."
Pinterest and Snap's fates will most likely hinge on the investing landscape, said Sanchez, also chief market strategist at Lido Advisors.
"The bigger challenge there ... really comes with their profitability and whether or not they can really build profitability," she said. "The fly in the ointment is that interest rates are going up. And as interest rates go up, investors are really weighing valuations and I think fundamentals are coming into play."
While Sanchez anticipated that investors will favor "growth at a reasonable price rather than pure value," high-growth companies will still have to prove themselves, she said.
"There has to be some growth, but I do actually think that profitability will matter, and so, there, I agree with Bank of America," she said.