March was another wild month in the stock market. The Russia-Ukraine war, changing monetary policy, rising inflation, and inflated energy prices all attracted major attention and rippled through the stock market on the back of the final month of earnings season. These factors created a volatile environment as we wrapped up the fourth-quarter earnings season. Stocks that delivered bad news took especially bad beatings as investor risk tolerance dwindled. Other stocks soared higher as investors sifted through the market looking for safety and opportunity.
Here are six stocks that were all big movers, impacted the market as a whole, and illustrated some of the major market trends in March.
Share prices of electric vehicle (EV) maker Rivian (NASDAQ: RIVN) dropped 25.6% in March. The stock was hit especially hard during the first half of the month as growth stocks dropped across the board. The company’s March 10 earnings announcement didn’t help matters either.
Rivian is struggling mightily with supply chain issues and input price inflation. These are global issues impacting every industry, but EV manufacturers are also dealing with supply shocks in the market for raw materials such as nickel, which are important for EV batteries.
As a result, Rivian announced a substantial increase in pricing for its trucks, which it partially walked back after negative customer reactions (those who already put down a deposit based on the old price were exempted from the new pricing). That whole ordeal raised major concerns for investors. It seems that Rivian is forced to choose between hurting margins or threatening demand in a competitive market. The stock for this disruptor is still trading at a price-to-sales ratio of nearly 200 even after the stock price drop, so investors need to be comfortable with major volatility as the company attempts to establish its niche in the EV market.
The story was a bit different for EV powerhouse Tesla (NASDAQ: TSLA), which climbed 24% last month. Investors seem to have responded favorably to news regarding Tesla’s battery supply, the launch of a factory in Berlin, and a not-yet-official stock split that should make the stock easier to trade.
There was no major news suggesting that the company’s fundamentals changed drastically, but this a volatile market. Growth investors are looking for any bit of good news, and Tesla appears to be doing a good job navigating supply chain challenges. It may have also benefited from investors who soured on Rivian but still want exposure to the EV industry. After a few rocky months, investors felt a lot better about Tesla in March.
3. The Trade Desk
The Trade Desk (NASDAQ: TTD) is a cloud-based media buying platform that specializes in marketing automation technologies, products, and services that better personalize digital content delivery. The stock fell 19% in March, even though no major news was released about the company. It was an extreme example of powerful market dynamics that were influencing growth stocks last month.
The Trade Desk dropped nearly 40% during the first two weeks of the month before rallying in the back half to claw back some of those losses. It remains nearly 40% below its all-time high achieved in November 2021. Its forward P/E is around 80 right now, which is fairly expensive. Investors should expect the roller-coaster ride to continue in the current market as long as the stock’s valuation remains aggressive.
The broader market got hit in March by the Federal Reserve raising interest rates as well as an escalation in the Russia-Ukraine conflict. Growth investors will hope that April settles down a bit now that investors have had a chance to digest that news.
4. Deere and 5. Caterpillar
March was a good month for industrials and value stocks. Well-known economic bellwether Caterpillar (NYSE: CAT) saw its stock climb 19%, while industrial peer Deere & Co‘s (NYSE: DE) stock rose nearly 16%. Those are enormous moves for such mature, large, diversified businesses. Neither company reported earnings in the month. Instead, fundamental news took a back seat to market dynamics.
Deere shares can be bought at a forward P/E ratio below 19, which is cheap in today’s market. Caterpillar is a Dividend Aristocrat with a similar valuation and roughly 2% dividend yield. Investors continue to move away from growth stocks and toward the established stalwarts.
Cybersecurity stock Okta (NASDAQ: OKTA) fell 17% last month. Okta opened the month by beating Wall Street’s quarterly earnings forecast, but the stock dropped due to a disappointing outlook for the upcoming year. That was a common theme among unprofitable growth stocks during earnings season.
These losses were compounded after the company announced a security breach late in March. Hackers were able to access Okta’s internal systems in January, apparently because they had control over an engineer’s computer for five days. That’s an enormous embarrassment for a cybersecurity business, and it’s not good for Okta’s brand if a handful of teenagers could compromise its service.
Despite all of that, Okta’s services don’t seem to have been impacted too drastically, even though the stock was punished. The full scale of the fallout remains to be seen. However, the company still has a strong long-term growth outlook, and the stock just got cheaper.
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