Disappointing earnings weigh on pandemic darlings – Stock Market News



Disappointing earnings weigh on pandemic darlings – Stock Market News

In an environment of rising interest rate expectations and elevated market volatility, nightmare reactions after earnings reports have become a common phenomenon over the past month. Pandemic darlings such as Netflix, Roku, Peloton and Shopify have been shattered since the beginning of the year, as earnings and growth guidance continue to disappoint investors. Moreover, Nvidia’s stock became a victim of Wall Street’s hefty expectations despite beating both top and bottom line targets.

Roku – the last victim

Roku was one of the stay-at-home winners during the pandemic, landing an astonishing 141% share price appreciation during 2020. However, the streaming TV company fell out of favor at the middle of 2021 due to the persisting supply chain disruptions and disappointing growth on active customer accounts.

The company released its fourth quarter earnings on Thursday, failing to beat analysts’ top line expectations and providing a discouraging future revenue guidance. During the earnings call, management blamed the ongoing supply chain bottlenecks and higher chip prices, stating that those headwinds will continue to cast a shadow over the TV industry in 2022, affecting its active accounts growth.

Roku’s stock price tumble by 22% in the aftermath of its earnings release, and its currently trading over 76% below its all-time highs. If the ongoing downward pressures persist, its stock may be headed towards the $58.00 level, before sellers shift their attention to the $26.00 hurdle. On the contrary, should buyers re-emerge, initial resistance might be found at the $176.50 before the bulls eye the $238.00 level.

More stocks have fallen out of grace

Similarly Netflix, which also benefitted from the boom in stay-at-home entertainment at the dawn of the pandemic, shed over 20% of its stock price after providing a disappointing net subscription guidance during its last earnings call. Another one-time winner, Peloton Interactive, saw its share price skyrocketing by 395% in 2020 as gym closures rushed people into home-training. However, the company has seen its rally coming into a shuddering halt as it is now struggling with slowing demand, trading by almost 82% lower from its 2020 peak.

Moreover, Palantir’s stock fell by more than 15% on Thursday as the software company missed on earnings, reporting a net loss of $156.2 million. Investors have punished its stock as they are demanding a profitable expansion from premium-priced companies. Lastly, the Canadian e-commerce company Shopify reported on Wednesday its last quarter earnings results, narrowly beating expectations, but it cautioned about a sales slowdown in 2022. This caused a massive sell-off on its stock, which tumbled by 26% since Thursday and is currently trading 60% lower from its 2021 all-time high.

Nvidia’s record revenues doesn’t seem enough for Wall Street

The most valuable US chip maker posted on Wednesday record-breaking earnings, outstanding margins compared with the rest of the industry and a strong future growth guidance. However, the results were apparently not enough to satisfy Wall Street’s lofty expectations, pushing its stock lower by over 10% on Thursday and Friday.

Nvidia continues to benefit from ongoing industry tailwinds, as both of its core gaming and data center segments continue to overdeliver. Nevertheless, investors were looking for more upside after the company walked away from the $40 billion acquisition of Arm Holdings earlier this month, raising the question of ‘what more could Nvidia’s investors be asking for?’.

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