Investors took another beating in April with the major stock indices losing trillions in value. The S&P 500 fell almost 9%, while the Nasdaq Composite fell more than 13%. Corporate earnings reports, fears of an upcoming recession, rising interest rates and inflation all played a role in last month’s winners and losers. These are some of the high-profile names that illustrated the major trends in the stock market in April.
Actions of Netflix (NASDAQ: NFLX) fell almost 50% in April after a disastrous earnings report. For the first time in over a decade, the streaming content disruptor reported a drop in subscriber numbers. Investors were already worried about slowing growth before this announcement, and stocks have been dealing with diminishing momentum due to COVID-19 stay-at-home trends.
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Stocks often experience large valuation swings as they go from growth to value. That appears to be happening as Netflix settles into a more established role in a mature industry, but there are other factors at play as well. There is extensive competition from a long list of streaming platforms. There are also concerns that consumers are reaching subscription fatigue. That’s not good for Netflix’s growth and cash flow potential, and the stock is taking a beating as a result.
2. Coin basis
world coinbase (NASDAQ: CURRENCY) it fell 41% last month, despite no earnings news from the company. There were some comments from analysts that weighed on the stock with negative comments about the growing influence of competition. None of that is exactly news, but such headlines can certainly drag share prices lower.
More than anything, Coinbase fell victim to capital market forces. Investors are pulling money out of risky assets, including growth stocks and cryptocurrencies. Bitcoin It fell by around 20% last month, with many of the smaller coins and tokens falling even further. Coinbase is a growth stock and its financial results reflect activity in the crypto markets. It was the perfect storm for a bad month. The long-term investment thesis did not change much for Coinbase. It’s cheaper if you like the business, but the same risks are still there.
tech giant Amazon (NASDAQ:AMZN) it fell almost 24% last month after a difficult earnings report. The drop in this stock highlighted a number of important economic and market trends at once. Like other retail stocks, Amazon is battling inflation and margins are tightening. Supply chain issues also continue to create disruption. Meanwhile, e-commerce sales are slowing as consumer wallets tighten and people head back to brick-and-mortar stores.
Amazon’s first-quarter results fell short of expectations due to these challenges, and the company’s full-year outlook raised serious concern on Wall Street. Even strong performance in Amazon’s cloud services segment was not enough to stave off big losses amid a sell-off in tech shares. This could signal a buying opportunity for Amazon bulls in the long run.
Twitter (New York Stock Exchange: TWTR) stood out as one of the few strong performers last month. Social media stocks jumped nearly 27% in April when news broke that Tesla CEO Elon Musk was trying to acquire the company. Regulatory filings showed that Musk had become the largest shareholder by acquiring nearly 10% of Twitter shares. He then proposed a buyout to make the social media platform private.
This was a fairly straightforward situation that had very little to do with Twitter’s operations or finances. When publicly traded companies are acquired, the new owners typically pay a premium, so credible news of the purchase sends stocks immediately higher. The deal is not entirely final, so Twitter’s market price reflects the likelihood that the acquisition will close.
nvidia (NASDAQ: NVDA) it fell more than 30% in April, despite reporting no major earnings news. It was a tough month for semiconductor stocks in general, with challenging macroeconomic conditions and some worrying earnings reports in the sector. That resulted in some collateral damage for stocks like Nvidia, which was vulnerable due to its aggressive valuation.
Multiple tech companies and market analysts have diagnosed another semiconductor supply shortage, with COVID-19-related plant closures in China the latest culprit. Fears about an economic slowdown related to rising interest rates are also a threat to this cyclical industry. Many investors who liked Nvidia stayed on the sidelines, because stocks have been so expensive in recent years. This could be exactly the opportunity those people were anticipating.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ryan Downie has positions at Amazon and Nvidia. The Motley Fool has positions and recommends Amazon, Bitcoin, Coinbase Global, Inc., Netflix, Nvidia, Tesla, and Twitter. The Motley Fool has a disclosure policy.