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February was a huge month in the stock market, and investors can look back to identify key trends. Earnings season created some winners and losers, while geopolitical tensions and a growth stock sell-off drastically increased volatility. Here are some of the stocks that played the biggest roles in February’s market.
1. Meta Platforms
Meta Platforms (NASDAQ: FB) dropped 32.8% in February, wiping out $300 billion in market capitalization. Most of the damage was inflicted in the days following the tech giant’s fourth-quarter earnings report. Meta’s earnings fell short of Wall Street’s forecasts, but investors were even more troubled by the details.
Image source: Getty Images.
The company reported a decline in daily active users across its social media platforms for the first time in its history. Meta issued sales guidance that was below analyst expectations, while its increased investments into virtual reality will reduce cash flow for the next few years.
In a difficult stock market, this combination of bad news and lukewarm outlook was enough to crush the social media leader.
2. PayPal
Fintech leader PayPal Holdings (NASDAQ: PYPL) was another victim of a poorly received earnings report, falling more than 35%. PayPal’s updated quarterly forecast calls for lower-than-expected sales growth and a decline in earnings relative to last year.
The company struggled to meet its forecasts for new account growth last year. PayPal is also dealing with a modest drag on sales as it loses transactions from eBay (NASDAQ: EBAY) that have contributed to revenue for years. With those challenges in mind, the company is abandoning its aggressive goal of achieving 750 million active accounts by 2025.
PayPal was a high-valuation growth stock, but its growth trajectory is in jeopardy. The valuation responded accordingly, moving closer to the ratios that are common among moderate-growth tech stocks.
3. Home Depot
Home Depot (NYSE: HD) was struggling along with the market in general before investors soured on its Feb. 22 earnings report. The retail stock reported respectable sales and earnings growth, and it announced a 15% increase in its quarterly dividend.
However, investors were concerned about a decline in traffic. Inflation and supply chain issues also present ongoing challenges that could threaten sales and cash flow this year. The company’s guidance for essentially no growth next year wasn’t good enough to sustain the stock’s 21.5 forward price-to-earnings (P/E) ratio and 1.9% dividend yield.
FB, PYPL, HD total return level. Data by YCharts.
4. Snap
Snap (NASDAQ: SNAP) staged a big turnaround and climbed 22.7% in February. The social media powerhouse beat analyst estimates for user growth and sales, and it achieved net profits for the first time ever.
The stock had fallen 70% from its all-time high, sending its price-to-sales (P/S) ratio as low as 24 prior to earnings. That steep sell-off left plenty of room for the rebound. Even after this rally, Snap is still more than 50% below the $83 per share that it hit last September.
As with other social media stocks, Snap faces short-term uncertainty due to Apple’s (NASDAQ: AAPL) iOS privacy updates. It also has a ton of long-term opportunity with virtual and augmented reality. That’s a recipe for volatility.
CVX, SNAP, BILL total return level. Data by YCharts.
5. Chevron
Chevron (NYSE: CVX) climbed 10.8% in February as oil soared above $95 per barrel, sending the energy sector higher. Chevron had stumbled late in January after its quarterly report revealed disappointing profits.
Still, the company achieved record free cash flow and reduced its debt, so a sharp spike in oil prices was enough to propel Chevron higher. Inflation across the global economy and conflict in Eastern Europe are boosting energy prices, which should translate to larger short-term profits for the oil giant.
6. Bill.com
Bill.com Holdings (NYSE: BILL) enjoyed a turnaround in February. The fintech stock lost half of its market value from November 2021 through January 2022, but it climbed 26.4% in February after a strong earnings report. In the first week of the month, Bill.com reported adjusted profits that were nearly breakeven, while analysts had expected a net loss of more than $15 million. The company also tripled revenue over the prior year, topping Wall Street’s forecast by 20%.
It is still at a stage where it’s naturally volatile. The company is consistently achieving enormous growth, but investors have to pay a premium to own it: The stock’s P/S ratio is over 50. As Bill.com burns through more than $15 million in cash each quarter to fund its growth, investors are quick to sell if there’s any hint of bad news about the company itself or the market in general.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Ryan Downie has no position in any of the stocks mentioned. The Motley Fool owns and recommends Apple, Bill.com Holdings, Inc., Home Depot, Meta Platforms, Inc., and PayPal Holdings. The Motley Fool recommends eBay and recommends the following options: long March 2023 $120 calls on Apple, short April 2022 $62.50 calls on eBay, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.
