Investors took another beating in April as major stock indices lost trillions in value. the S&P500 fell nearly 9%, while Nasdaq Compound plunged more than 13%. Corporate earnings reports, fears of an upcoming recession, rising interest rates and inflation all played major roles in last month’s winners and losers. Here are some of the high-profile names that exemplified major stock market trends in April.
Shares of netflix (NFLX -3.90%) fell nearly 50% in April after a disastrous earnings report. For the first time in over a decade, the streaming content disruptor has reported a drop in its subscriber count. Investors were already worried about slowing growth ahead of this announcement, and the stock faced a drop in momentum due to COVID-19 stay-at-home trends.
Stocks often experience significant valuation shifts as they move from growth to value. This seems to be playing out as Netflix settles into a more established role in a maturing industry, but there are other factors at play as well. There’s intense competition from a long list of streaming platforms. There are also concerns that consumers are reaching subscription fatigue. This is not good for Netflix’s growth and cash flow potential, and the stock is suffering the consequences.
Coinbase global (PIECE OF MONEY -9.20%) fell 41% last month, although there was no earnings news from the company. There was some analyst chatter that impacted the stock with negative comments about the growing influence of the competition. None of this is really news, but such headlines can certainly drive stock prices down.
More than anything, Coinbase fell victim to capital market forces. Investors pull money from risky assets, including growth stocks and cryptocurrencies. Bitcoin fell around 20% in the past month, and many smaller currencies and tokens have fallen 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 hasn’t changed much for Coinbase. It’s cheaper if you like the company, but all the same risks are still present.
Tech giant Amazon (AMZN -1.40%) fell nearly 24% last month after a tough earnings report. The stock’s decline highlighted several major economic and market trends at once. Like other retail stocks, Amazon is struggling with inflation and margins are tightening. Supply chain issues also continue to create disruptions. Meanwhile, e-commerce sales are slowing as consumer wallets tighten and people return to physical stores.
Amazon’s first quarter results fell short of expectations due to these challenges, and the company’s outlook for the full year has raised serious concerns on Wall Street. Even the strong performance of Amazon’s cloud services segment was not enough to avoid huge losses amid a sell-off in tech stocks. This could signal a buying opportunity for long-term Amazon bulls.
Twitter (TWTR -1.11%) stood out as one of the few strong performers last month. Social media stock rose almost 27% in April when the news broke You’re here CEO Elon Musk was trying to acquire the company. Regulatory filings showed Musk had become the largest shareholder, acquiring nearly 10% of Twitter shares. He then offered a takeover to privatize the social media platform.
It was a fairly straightforward situation that had very little to do with Twitter’s finances or operations. When publicly traded companies are acquired, the new owners typically pay a premium, so credible news about takeovers immediately drives stocks higher. The deal isn’t quite final, so Twitter’s market price reflects the likelihood of the acquisition closing.
Nvidia (NVDA -0.90%) fell more than 30% in April, even though it did not report major earnings news. It was a tough month for semiconductor stocks across the board, with tough macro conditions and some worrying earnings reports in the sector. This resulted in collateral damage for stocks such as Nvidia, which was vulnerable due to its aggressive valuation.
Several tech companies and market analysts have diagnosed a new shortage in semiconductor supply, with China’s COVID-19-related factory shutdowns being the latest culprit. Fears of an economic slowdown linked to rising interest rates also pose a threat to this cyclical industry. Many investors who liked Nvidia stayed on the sidelines because the stock had been so expensive in recent years. This could be exactly the occasion these folks have been anticipating.