Moderna and Netflix Are the S&P 500’s Worst-Performing Stocks This Year
Jan 25, 2022
In January, the equity market took a huge hit, with the S&P 500 dropping about 10% as investors anticipate future Fed's interest rate rises and struggle with increasing bond rates.
However, not all equities have fared equally well in the downturn. Moderna, Netflix, Etsy, Enphase Energy, and EPAM Systems dropped over 30% this year.
One of last year's breakout companies, Moderna, was the biggest underperformer. Even though Covid-19 instances have reached record highs, the vaccine manufacturer has lost 42% this year. Moderna stock soared in 2021, propelled by rapid vaccination programs. Investors have pushed back as vaccination rates have stalled and experts have begun to warn about the pandemic becoming endemic, lowering the company's price.
"Bulls previously referred to Moderna as the 'Tesla of Biotech,' implying that the stock story trumped valuation assumptions, but the latter now seems more credible," said BofA analyst Geoff Meacham in a research note.
Netflix isn't far behind, with the stock down 38%. The stock has been falling for months as rivals enter the streaming business. Netflix's fourth-quarter results were a further setback, as the business failed subscriber projections and gave an alarming outlook.
Netflix attracted 8.3 million customers in the fourth quarter, falling short of the company's projection of 8.5 million. It predicts just 2.5 million new customers in the first quarter and worse profitability in 2022 than 2021.
Etsy is down 30.2% this year, succumbing to the general lack of enthusiasm for growth equities afflicting the technology sector. Investors feared that the crafts market would struggle to maintain its pandemic-fueled growth. Analysts believe the stock's attitude is shifting because its reduced value is enticing to certain purchasers.
KeyBanc analyst Edward Yruma raised Etsy to Overweight from Sector Weight last week, finding a long-term possibility for the business to quadruple sales. On Monday, the stock increased by 2.7%.
"On both counts, we believe ETSY performs well," he said in a research note. "We feel ETSY has made great progress in reducing buyer friction."
Enphase Energy, a solar specialist, and EPAM Systems, a software company, have also had a difficult year, with their stocks plunging 33.4% and 31.4%, respectively.