Topline
Several of the top stocks that drove the market’s historic rise in the middle of the pandemic fell further than the broader market, as investors pack into safer assets and shun their one-time favorites as fears of a recession and more aggressive monetary policy escalate.
Peloton shares are down more than 95% in the last 20 months.
Key Facts
Peloton shares closed at an all-time low of $7.05 Thursday following a 14% single-day drop after the at-home-fitness company’s announcement it would sell its equipment at Dick’s Sporting Goods; the stock is trading more than 95% below its January 2021 high as it struggles to convince investors of a turnaround.
Shares of used car companies Carvana and CarMax dropped Thursday 20% and 25%, respectively, after CarMax’s earnings came in well short of expectations, and Carvana is a staggering 94% below its August 2021 peak, while CarMax is 56% off of its November 2021 high.
The three stocks stabilized in early Friday trading, with Peloton rising 0.9% CarMax climbing 0.6% and Carvana dipping 0.5%.
AMC and Bed Bath and Beyond, meme stocks that soared in value last January, were not immune to the dip, each falling more than 5% this week, though still trading above their fundamentals (UBS and Goldman Sachs each have a target below $4 for Bed Bath & Beyond, still far below its $6.35 ticker).
All are down far more than the market broadly which is itself falling further into bear market territory; the Dow Jones Industrial Average, S&P 500 and tech-heavy Nasdaq are each down more than 7% in September and about 1% this week.
Nike, which rose more than 160% between March 2020 and November 2021 on the back of strong online sales, tanked 10.7% to $85.16 in early trading Friday, its largest post-earnings decline in at least 21 years, per Bespoke Investment Group, and UBS analysts lowered its Nike price target from $156 to $141, maintaining their buy rating for the stock.
Key Background
The stock market has sputtered in 2022 as the Federal Reserve pursues its most aggressive interest rate hikes in decades to tamp down inflation, with the Dow down 20% year-to-date, while the S&P and Nasdaq are down 24% and 32%, respectively. Markets dipped Thursday after several economic indicators, including surprisingly strong unemployment data, struck fears that the Fed will be more hawkish than previously expected.
Crucial Quote
“Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target,” Lael Brainard, the Fed’s vice chair, said in a Friday speech. “For these reasons, we are committed to avoiding pulling back prematurely. We also recognize that risks may become more two sided at some point. Uncertainty is currently high, and there are a range of estimates around the appropriate destination of the target range for the cycle.
Contra
Fellow pandemic darling stocks Zoom and Netflix each posted modest gains this week, but are eachstill down about 60% year-to-date. AMC and Bath & Beyond’s meme stock compatriot Gamestop is up 3% this week but still down 33% this year.
Further Reading
Stock Market Gloom ‘Worse Than Ever’ As Fed Signals It May Keep Tightening Until Recession (Forbes)
Peloton Will Sell Bikes At Dick’s, Continuing Outside Retail Push (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/09/30/peloton-shares-crash-and-hit-all-time-low-as-pandemic-stock-darlings-fall-back-to-earth/