A man walks in front of Peloton studio on May 5, 2021 in New York.
John Smith | WATCH the press | Corbis News | beautiful pictures
Peloton falls below its IPO price, Netflix suffered its biggest drop in a decade and chip stocks continued to struggle. Add it all and Nasdaq just closed worst week since the beginning of the pandemic.
By the end of Friday, the Nasdaq was down 7.6% for the week, its biggest drop since March 2020, as global markets were engulfed in Covid-19 fears. It was also the fourth consecutive weekly decline for the heavy tech index, the longest losing streak since a similar period last April and May.
Looking forward to 2022, the story for tech stocks is to pivot outward. Inflationary pressures led the Federal Reserve to signal that rate hikes were imminent. Shares of cloud companies and other high-ratio stocks that have outperformed the market in recent years are plunging because of the work-from-home topic. disbanded.
The business fundamentals remain looks like a snakeeven so, and the economy is on the upswing.
That confidence waned this week, as dire news about pockets in the tech sector raised concerns about a wave of Q4 tech earnings reports that is expected to begin in the coming days.
Peloton on Thursday reported Preliminary quarterly results and indicates that the number of connected fitness subscribers is falling short of expectations. The company released the following release CNBC reported that Peloton is suspending production of its connected bicycles and treadmills and looking to keep costs under control.
John Foley, founder and chief executive officer of Peloton Interactive Inc.
Chris Goodney | Bloomberg | beautiful pictures
“As we discussed last quarter, we are taking significant regulatory actions to improve our profit outlook and optimize our costs across the company,” said Peloton CEO. , John Foley said in a statement.
Peloton shares plummeted 24% on Thursday, before a partial recovery on Friday sent them down 14% for the week. Shares closed at $27.06, $29 below the IPO price from 2019.
Peloton is a niche company whose product was in high demand in the early days of the pandemic, when consumers were stuck at home and gyms closed.
But what may have been dismissed as a one-off took hold after a few hours on Thursday, when a much larger company, Netflix, shocks the market.
The video-streaming company said it expects to add 2.5 million subscribers in the first quarter of 2022, well below analyst estimates of 6.93 million, according to StreetAccount . Shares fell 22% on Friday, their steepest drop in nearly a decade, and are down 24% for the week.
Investors follow by selling off streaming audio services Spotify, 11% off for the week and the game company Roblox, down 13%. Meanwhile, Amazon had worst week since 2018, down 12%.
Trading app Robin Hood hero and Coinbase also had a rough week, falling 14% and 17% respectively, amid a slide in the speculative asset market, including cryptocurrencies.
Earning season is here
Tech earnings season will kick off successfully next week, with IBM reported on Monday, followed by Microsoft on Tuesdays and Intel Wednesday.
Of the three companies, Intel suffered the most this week, down 6.6%. It’s part of a broader decline in semiconductor companies, such as AMD, Qualcomm and Nvidia dropped more than 12%.
Supply chain constraints remain an issue, and investors may be expecting some worrisome forecasts for device sales as earnings dwindle. Researchers IDC said last month that the PC market is likely to slow down this year after two years of double-digit growth.
In a report Thursday, analysts at Piper Sandler downgraded AMD to the equivalent of hold from buy, based in part on the trajectory of PC sales. AMD is expected to report its fourth-quarter results on February 1.
“We don’t see the company missing estimates for the next two quarters, but ultimately we see a combination of slower growth and a slowing PC environment weighing on the stock,” Piper Sandler wrote. .
Tech stocks underperform in 2022
CNBC
For the year, the Nasdaq is down 12%, losing to the S&P 500, which is down 7.7%, and the Dow Jones Industrial Average, down 5.7%. In 2021, Nasdaq lags behind the S&P for the first time since 2016.
The S&P hasn’t beaten Nasdaq for two years in a row since 2006 (when it ended a three-year streak ahead of Nasdaq). While it’s still very early to make a call on how 2022 will end, technology is off to an ominous start and investors enter earnings season very early.
CLOCK: Nancy Tengler said we are adding to the financial technology, energy sector
