Investors took another beating in April with major stock indexes losing trillions in value. The S&P 500 fell nearly 9%, while the Nasdaq Composite plunged more than 13%. Corporate earnings reports, fears of an upcoming recession, rising interest rates, and inflation all played major roles for last month’s winners and losers. Here are some of the high-profile names that illustrated major trends in the stock market in April.
Shares of Netflix (NASDAQ: NFLX) dropped nearly 50% in April after a disastrous earnings report. For the first time in over a decade, the streaming content disruptor reported a decline in its subscriber count. Investors were already concerned about slowing growth prior to this announcement, and the stock has been dealing with dwindling momentum from COVID-19 stay-at-home trends.
Stocks often experience major valuation shifts as they transition from growth to value. That seems to be playing out as Netflix settles into a more established role in a maturing industry, but there are other factors at play too. There’s extensive competition from a long list of streaming platforms. There’s also concern 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.
Coinbase Global (NASDAQ: COIN) tumbled 41% last month, even though there wasn’t any earnings news from the company. There was some analyst chatter that impacted the stock with negative commentary about the rising influence of competition. None of that is exactly news, but such headlines can certainly drag share prices downward.
More than anything, Coinbase was the victim of capital market forces. Investors are pulling money from risky assets, including growth stocks and cryptocurrencies. Bitcoin dropped around 20% last month, and many of the smaller currencies and tokens fell even further. Coinbase is a growth stock, and its financial results reflect activity in crypto markets. It was the perfect storm for a bad month. The long-term investment thesis didn’t change much for Coinbase. It’s cheaper if you happened to like the business, but all of the same risks are still present.
Tech giant Amazon (NASDAQ: AMZN) fell almost 24% last month after a tough earnings report. This stock’s decline highlighted a number of major economic and market trends all at once. Like other retail stocks, Amazon is struggling with inflation, and margins are tightening. Supply chain issues continue to create disruptions as well. Meanwhile, e-commerce sales are slowing as consumer wallets tighten, and people return to brick-and-mortar stores.
Amazon’s first-quarter results fell short of expectations due to these challenges, and the company’s outlook for the full year sparked major concern on Wall Street. Even strong performance in Amazon’s cloud services segment wasn’t enough to avoid huge losses in the midst of a tech stock sell-off. This could signal a buying opportunity for long-term Amazon bulls.
Twitter (NYSE: TWTR) stood out as one of the few strong performers last month. The social media stock rose nearly 27% in April when news broke that Tesla CEO Elon Musk was attempting to acquire the company. Regulatory filings showed Musk had become the largest shareholder, acquiring nearly 10% of Twitter’s shares. He then proposed a buyout to take the social media platform private.
This was a pretty straightforward situation that had very little to do with Twitter’s financials or operations. When publicly-traded companies are acquired, the new owners typically pay a premium, so credible buyout news drives shares immediately higher. The deal isn’t quite final, so Twitter’s market price reflects the likelihood of the acquisition closing.
Nvidia (NASDAQ: NVDA) fell more than 30% in April, even though it didn’t report major earnings news. It was a tough month for semiconductor stocks across the board with challenging macroeconomic conditions and a few worrisome earnings reports in the sector. That resulted in some collateral damage for stocks such as Nvidia, which was vulnerable due to its aggressive valuation.
Multiple tech companies and market analysts have diagnosed yet another semiconductor supply shortage with COVID-19-related plant closures in China being the latest culprit. Fears about an economic slowdown related to rising interest rates are also a threat for this cyclical industry. Many investors who liked Nvidia remained on the sideline, because the stock was so expensive for the past few years. This could be exactly the opportunity that 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 in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Bitcoin, Coinbase Global, Inc., Netflix, Nvidia, Tesla, and Twitter. The Motley Fool has a disclosure policy.