Investors who bought stocks during the COVID-19 market crash in 2020 have generally experienced some big gains in the past two and a half years. But there is no question some big-name stocks performed better than others since the pandemic bottom.
Invesco's Bumpy Ride: One company that has been a disappointing investment in the past two and a half years has been mortgage REIT Invesco Mortgage Capital Inc IVR.
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Shares of Invesco and other mortgage REITs were crushed in March 2020 as the pandemic created incredibly difficult financial conditions for the companies.
Recession fears tanked the value of Invesco’s mortgage-backed securities (MBS). The company had used these assets as collateral to borrow against, so this drop in value prompted the company’s leaders to demand additional cash as collateral instead. When Invesco Mortgage tried to sell some of its assets to raise that cash, the MBS market was so illiquid at the time that it was unable to find buyers.
Invesco ultimately entered a forbearance agreement with its creditors, which allowed the REIT time to sell assets at more reasonable prices. Following its crisis, the company shifted its business model to focus on government-guaranteed mortgages.
Invesco Mortgage was a hot day trading stock on Robinhood Markets Inc HOOD after the stock’s share price collapsed in 2020. But hopes of a long-term rebound to anywhere near the stock’s pre-pandemic highs seem unlikely at this point.
At the beginning of 2020, Invesco Mortgage shares were trading at $16.64. By the beginning of March, the stock was down to $16.33 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
When the market crashed during the U.S. COVID-19 outbreak, Invesco Mortgage shares dropped as low as $1.82 on April 3, 2020, during the height of the pandemic fears.
When the market bounced off pandemic lows, the company began to rebound as well. The stock reached $8.40 per share in June 2020 before the recovery rally fizzled out.
Invesco Mortgage didn’t maintain the momentum of the broader market in the second half of 2020. In fact, the stock was back below $3 by the end of July 2020.
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Invesco Mortgage In 2021, 2022, Beyond: Invesco Mortgage stock hit its 2021 high of $4.60 in June before a disappointing earnings report sent the stock tumbling once again.
The company's shares continued to tank as mortgage rates climbed in 2022. The stock completed a 10-for-1 reverse stock split in June 2022 to maintain its NYSE listing and dropped to a post-split low of $9.60 in October 2022 before rebounding to $12.70 as of Dec. 19.
Still, investors who bought Invesco on the day it hit its 2020 pandemic low and held on have generated a lackluster return on their investment. In fact, $1,000 in Invesco stock bought on April 3, 2020, would be worth about $1,055 today, assuming reinvested dividends.
Looking ahead, analysts are expecting Invesco Mortgage stock to resume its downtrend in the next 12 months. The average price target among the three analysts covering the stock is $12, suggesting 5.5% downside from current levels.
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