The 46% collapse last week in shares of online competitions promoter Best of the Best (BOTB:AIM) should serve as a stark warning to investors who are still riding the wave of ‘pandemic winners’.

The slide came after the firm blamed disappointing new customer registrations and stubbornly high marketing costs for slashing its current year profit guidance to 62% below the market forecast, with a follow-on effect on next year’s earnings.

With ‘their newfound freedoms, the distractions of major sporting events and ability to travel’, even its existing customers were less engaged with its online offering, the firm said.

Like many online businesses, Best of the Best had a banner year in 2020 as millions of people turned to the internet for entertainment during the first and second lockdowns. With restrictions now lifted, punters have drifted away in their droves.

Online contracts-for-difference platform Plus500 (PLUS), another big lockdown winner, saw an even steeper drop in revenue in the first half. Moreover, earnings fell almost 50% in the second quarter as the number of new customers halved while marketing costs jumped over 40%.

The firm won investors over by saying it expected to beat full year revenue forecasts, although the consensus estimate it chose was deliberately low and it recently made an acquisition, which should automatically lift turnover, but it gave no guidance on earnings. We would not be surprised if this former winner also warned in the months to come.

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