by John Rubino, Dollar Collapse:
With inflation at a 40-year high and the Federal Reserve signaling a series of interest rate hikes on the horizon, investors started the year by fleeing growth stocks, sending the Nasdaq in January to its worst month since March 2020, the early days of the pandemic.
The outlook over the past three weeks has gone from bad to substantially worse. Russia’s invasion of Ukraine last month rattled an already fragile stock market, sprinkling geopolitical unrest into the stew of volatility. Oil prices just spiked to their highest in over 13 years, and other commodity prices are on the rise on supply concerns as Russia is a key producer of wheat, palladium and aluminum.
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Energy and utilities are the only places in the U.S. where investors are finding comfort. While everything else is getting hit, the highest-growth tech stocks are proving unpalatable to all but the most fervent industry bulls.
“The mood of the market is real foul right now for good reasons,” Snowflake CEO Frank Slootman told CNBC’s “Mad Money” on Wednesday. Shares of the cloud data analytics vendor plunged even though revenue beat estimates and the company gave an upbeat forecast.
Snowflake is more than 50% off its 52-week high reached in November. That makes the company a relative safe haven compared to wide swaths of the tech industry. Numerous stocks have lost at least three-quarters of their value since peaking in late 2021, and some well-known names are down 90% or more.
Byron Deeter, a partner at Bessemer Venture Partners and a cloud evangelist, said the median member in his basket of subscription software stocks is down 53%, and that price-to-sales multiples, on average, have compressed from 25 to below 12.
“This sector has just been pounded and yet the macro trends remain very much intact,” Deeter told CNBC’s “TechCheck” on Monday. “You continue to have these extremely high-quality names but they’re on sale across the board.”
CNBC pulled a list of tech and tech-adjacent companies currently valued at $1 billion or more that have lost at least 75% of their value from their 52-week highs. Here are 10 of the most notable companies.
Discount mobile commerce app Wish has struggled since shortly after its IPO in December 2020. The stock priced at $24 and got as high as $32.85. But it’s now trading at $1.99, and is more than 90% below its intraday 52-week high from almost a year ago.
Wish’s challenges are separate from the broader issues facing tech stocks. Fourth-quarter revenue plummeted 64%, declining for a third straight period. The story has gotten worse each quarter, with the primary problem being that people are abandoning the app.
CEO Vijay Talwar spent part of the company’s earnings call on Tuesday trying to reassure investors.
“These numbers tell me we need fresh thinking to guide us back to the growth that we know is possible,” Talwar said.
Shareholders don’t see things improving anytime soon. The stock sank 16% last week.
Robinhood’s stock-trading app became a favorite for retail investors buying and selling meme stocks and cryptocurrencies, particularly after Covid-19 hit in a big way.
Robinhood’s stock, which started trading in July, has largely been a bust. It’s down 70% from its IPO price and 87% from its high in August.
The early hype cycle for Robinhood would have been hard to sustain in the best of times. On Aug. 3 investors pushed the stock up 24% despite a lack of news. On Aug. 4, it went up 50% with the launch of options trading, which has been a popular choice for Robinhood’s users. But a day later the stock fell almost 28% after the company said existing shareholders would sell up to 97.9 million shares.
In January, the company gave a bleak forecast for the first quarter and showed a decline in monthly active users.
In 2020, Stitch Fix more than doubled in value, driven by the broader surge in e-commerce stocks. Since January 2021, the shares have been on a downward trajectory. They’re down 85% from a year ago, the 52-week high, and over 90% from a record a couple months earlier.
Stitch Fix shares plunged 24% on Dec. 8, after the company warned that weaker-than-expected growth in new customers would weigh on 2022 revenue. Much of the slowdown was attributed to the rollout of a product called Freestyle, geared towards personalizing the shopping experience. CFO Dan Jedda called the transformation a “multi-year endeavor.”
In addition to fewer new customers, Jedda said the guidance “reflects the ongoing macro impact of global supply chain challenges in the industry.”
In November, the stock fell 35% in a single session after subscription revenue, digital subscribers and gross margin all fell short of expectations. On Jan. 20, CNBC reported that Peloton was temporarily halting production of its connected fitness products, sending shares down almost 24%.
Peloton said on Feb. 8 that CEO John Foley would step down and the company would trim 20% of its workforce. The stock is down 83% from its 52-week high in July.
Affirm got a major jolt during the pandemic as its “buy now, pay later” offering was widely adopted by online retailers. Amazon even jumped aboard in August, helping boost the stock 71% that month.