Remember the S&P 500's huge 100% gain coming out of the Covid-19 pandemic market crash? Well, it's like it never happened at some companies.
Four S&P 500 giants: Netflix, Stanley Black & Decker, PayPal and Meta Platforms have entirely given back their 100% or greater gains from the pandemic rally, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
These are just the most dramatic examples yet of how much trouble many corners of the market are in. Covid-19 might be less of a fear now, but inflation, higher rates and economic slowdowns are infecting the S&P 500 now.
"While monetary policy is a time-tested tool for curbing inflation, this rare, brisk and aggressive pace of further rate hikes risks sparking higher unemployment, a recessionary economy, and other downstream negative impacts of over-tightening moves by the Fed," said AXS Investments CEO Greg Bassuk.
Pain Is Mounting In The S&P 500
The S&P 500 landed back in bear market territory Thursday, following the Fed's threats to snuff out inflation at whatever cost.
And that's starting to leave a mark. The S&P 500 itself is now down more than 20% this year. Additionally, half the 101% gain from the pandemic lows on March 16, 2020, through the relief rally high on Dec. 27, 2021 is gone. The S&P 500 itself is now only up 56% from the pandemic lows.
But the average itself masks much of the pain. Half the stocks in the broad S&P 1500 jumped 100% or more during the pandemic rally. But now, of those, 17 stocks (2% of the index) have given up the entire gain. Every last penny.
Most alarmingly, though, is that four of them are widely held big-caps in the S&P 500.
S&P 500 Investors Stop Binging Netflix Stock
Netflix was supposed to be one of the largest beneficiaries of the pandemic. Shares soared more than 105% from the market's lows in the pandemic to the highs. The idea is everyone would stay home and stream "Stranger Things."
But a funny thing has happened: Competition. Hollywood studios tired of watching Netflix better monetize their content than they could themselves, got in the streaming game. Shares of Netflix are down a crushing 61% this year. That helps to completely wipe away the stock's pandemic gains. But it's worse than that. Netflix shares are nearly 21% lower now than they were at the pandemic low.
Competition is taking a real bite out of Netflix's business. Analysts think the company's adjusted profit per share this year will fall nearly 8%. And analysts, for one of the first times in the company's history, rate the stock a "hold," which really means sell.
Metaverse ... Not
Another dramatic example is Facebook, now known as Meta Platforms. CEO Mark Zuckerberg is paying dearly for his distracting pivot from lucrative online advertising to virtual worlds.
Meta's stock had rallied more than 135% in the pandemic bull market. But it's erased all that and then some by losing more than half its value this year. The company is resorting to all sorts of moves to reinvigorate growth, such as hiking the price for its metaverse headset by 33%. But analysts still think its profit will fall nearly 30% this year.
In fintech, it's a similar story with PayPal. Shares of the online payment service are down 5.5% from the pandemic lows.
Not Just A Tech Crash
It's tempting to just think S&P 500 investors are undoing their enthusiasm for technology. But that's not entirely the case. Shares of tools maker Stanley Black & Decker soared more than 112% in the pandemic rally. With shares off 57% this year, the stock is now 7% lower than at the lows of the pandemic crash.
Could it be these pandemic plays were the only ones that needed to be deflated? Possibly, but analysts are already warning that you should sell some other S&P 500 stocks before it's too late.
Pandemic Gains Gone!
These S&P 500 stocks are lower now than at start of the pandemic rally
| Company | Symbol | Pandemic rally (from low to high) | Drop from pandemic low | Sector |
|---|---|---|---|---|
| Netflix | 105.2% | -20.7% | Communication Services | |
| Stanley Black & Decker | 112.5 | -6.8 | Industrials | |
| PayPal Holdings | 107.1 | -5.5 | Information Technology | |
| Meta Platforms | 137.1 | -2.2 | Communication Services |
