The deepening of supply chain constraints due to the ongoing Russia-Ukraine crisis, high inflation, and the resurgence of COVID-19 cases are expected to keep the stock market under pressure. Many are even predicting an economic downturn due to persistent inflation and soaring energy prices.
However, rising investments in various sectors of the economy and increased focus on domestic production should help the economy recover, even if at a slower pace. The uncertainties surrounding the economy and the stock market do not bode well for large-cap growth stocks, as they typically benefit from an economic expansion. The iShares S&P 500 Growth ETF’s (IVW) 1.3% returns over the past week indicate investors’ underwhelming interest in large-cap growth stocks.
Large-cap growth stocks Snowflake Inc. (SNOW), PayPal Holdings, Inc. (PYPL), DoorDash, Inc. (DASH), Snap Inc. (SNAP), and Marvell Technology, Inc. (MRVL) could witness a downtrend in the near term. So, these stocks are best avoided now.
Snowflake Inc. (SNOW)
With a market capitalization of $58.51 billion, SNOW provides a cloud-based data platform that enables customers to consolidate data into a single source to drive business insights, build data-driven applications and share data worldwide. Its platform enables the creation of its private data exchange to share and collaborate with business partners, suppliers, and employees in a centrally managed data hub.
On March 29, 2022, SNOW and Blue Yonder, the digital supply chain and omnichannel commerce fulfillment leader, announced a partnership to address joint customers' evolving supply chain needs and transform access to disparate data for supply chain management. Using Blue Yonder’s Luminate Platform, Powered by Snowflake, joint customers will be able to use a single-source data infrastructure that eliminates workstream siloes and provides real-time, end-to-end orchestration across planning, execution, and commerce. This offering should help the companies witness high demand in the coming months.
For the fiscal 2022 fourth quarter ended January 31, 2022, SNOW’s pre-tax loss decreased 33.9% year-over-year to $130.61 million. The company’s net loss came in at $132.15 million, down 33.6% from the prior-year period. Its loss per share came in at $0.43 for the quarter, indicating a 38.6% year-over-year improvement. As of January 31, 2022, the company had $1.09 billion in cash and cash equivalents.
Over the past three years, SNOW’s revenue and total assets have grown at CAGRs of 132.8% and 105.7%, respectively. The stock has lost 45.1% year-to-date and ended yesterday’s trading session at $185.98.
SNOW’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SNOW has an F grade for Stability, a D grade for Value and Quality, and a C grade for Momentum. Click here to see the additional ratings for SNOW’s Sentiment, Momentum, and Growth.
Among the 82 stocks in the D-rated Technology - Services industry, SNOW is ranked #66.
PayPal Holdings, Inc. (PYPL)
With a $110.56 billion market capitalization, PYPL operates as a technology platform and digital payments company that enables customers and merchants to execute digital and mobile payments worldwide. The payments platform allows consumers to transfer and withdraw funds from their bank accounts and hold balances in their PayPal accounts in various currencies. It also offers gateway services that enable merchants to accept payments online with credit or debit cards and digital wallets.
On April 5, 2022, PYPL introduced the new PayPal Cashback credit card, issued by consumer financial services company Synchrony Financial (SYF)’s Synchrony Bank subsidiary, offering customers more cashback when they pay with PayPal at checkout – online, mobile, or in-store with PayPal QR Code or anywhere Mastercard is accepted. The PayPal Cashback credit card offers customers a new user interface within the PayPal app and the web, delivering a simplified and more integrated way to access rewards, manage purchases, and make payments. The companies should witness high demand in the coming months.
For the fiscal 2021 fourth quarter ended December 31, 2021, PYPL’s non-GAAP operating income came in at $1.51 billion, down marginally from the prior-year period. As of December 31, 2021, PYPL had $5.20 billion in cash and cash equivalents.
The consensus EPS estimate of $1.12 for PYPL’s fiscal 2022 second quarter ending June 30, 2022, represents a 2.6% decline from the prior-year period. Over the past three years, the company’s revenue and total assets have increased at CAGRs of 18% and 20.5%, respectively. PYPL has lost 49.7% year-to-date and ended yesterday’s trading session at $94.90.
PYPL’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall C rating, which equates to Neutral in our proprietary rating system.
PYPL has a C grade for Value, Stability, Momentum, and Quality. Click here to see additional ratings for PYPL’s Growth and Sentiment.
PYPL is ranked #39 of 50 stocks in the D-rated Consumer Financial Services industry.
DoorDash, Inc. (DASH)
DASH operates a logistics platform that connects merchants, consumers, and dashers internationally. The company’s merchant software portal allows merchants to track business performance on several metrics. Its subscription product, DashPass, serves as a membership program and offers consumers access to merchants. It has a $34.89 billion market capitalization.
On March 1, 2022, DASH entered into a definitive agreement to acquire hospitality technology startup, Bbot, to better support the evolving needs of restaurateurs and other food and beverage venue operators. The addition of Bbot's products and technology to DASH’s suite of first-party Platform Services offers merchants more solutions for their in-store and online channels, including in-store digital ordering and payments.
For its fiscal year 2021 fourth quarter ended December 31, 2021, DASH’s loss from operations came in at $154 million, down 49.5% from the prior-year period. While its net loss decreased 50.3% year-over-year to $155 million, its EPS fell 83.2% to $0.45. The company had $2.50 billion in cash and cash equivalents as of December 31, 2021, down 42.4% from the end of fiscal 2020.
Analysts expect the company’s EPS to remain negative for the fiscal 2022 second quarter, ending June 30, 2022. It missed Street EPS estimates in each of the trailing four quarters.
Over the past three years, DASH’s revenue and total assets have grown at CAGRs of 156.1% and 115.2%, respectively. The stock has lost 32.8% year-to-date and ended yesterday’s trading session at $100.14.
The stock’s weak prospects are reflected in its POWR Ratings. The stock has an overall D rating, which equates to a Sell in our proprietary rating system.
DASH has a D grade for Value, Stability, and Sentiment. Click here to see the additional ratings for DASH’s Quality, Momentum, and Growth.
DASH is ranked #30 of 33 stocks in the F-rated Internet - Services industry.
Snap Inc. (SNAP)
SNAP operates as a camera company and is known for its wide range of stickers, Bitmojis, and filters. The company also provides Spectacles, an eyewear product that connects with Snapchat and captures video from a human-eye perspective. It also provides advertising products that include AR and Snap ads. It has a $49.96 billion market capitalization.
For its fiscal 2021 fourth quarter ended December 31, 2021, SNAP’s operating loss came in at $25.13 million for the quarter, indicating a 74.2% decline from the prior-year period. The company had $1.99 billion in cash and cash equivalents as of December 31, 2021.
The consensus EPS estimate of $0.07 for its fiscal 2022 second quarter, ending June 30, 2022, represents a 30% decline from the prior-year period. Over the past three years, the company’s revenue and total assets have increased at CAGRs of 51.7% and 40.6%, respectively. The stock has declined 34.6% year-to-date and closed yesterday’s trading session at $30.76.
SNAP’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to a Sell in our proprietary rating system.
The stock has an F grade for Stability and a D grade for Value. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for SNAP’s Growth, Sentiment, Quality, and Momentum here.
SNAP is ranked #54 of 71 stocks in the F-rated Internet industry.
Marvell Technology, Inc. (MRVL)
Based in Bermuda, MRVL is a semiconductor manufacturer that offers a security and networking platform, secure data processing, networking, and storage solutions. It designs, develops, and sells analog, mixed-signal, digital signal processing, embedded and standalone integrated circuits, and a portfolio of Ethernet solutions. It has a $53.36 billion market capitalization.
On March 7, 2022, MRVL and Hisense Group, a Chinese multinational white goods and electronics manufacturer, announced a production-ready 400G QSFP-DD OpenZR+ optical module based on the Marvell Deneb Coherent DSP (CDSP). As the demand for OpenZR+ coherent pluggable rises to support IP-over-DWDM (IPoDWDM) used to eliminate separate full-function optical transport boxes, the Hisense Broadband 400G QSFP-DD small form-factor pluggable module will deliver high performance and scalability required to enable cost-effective, simplified, 5G and cloud data center services. This product should witness high demand in the coming months.
MRVL had $613.53 million in cash and cash items as of January 29, 2022. Over the past three years, the company’s revenue and total assets have increased at CAGRs of 15.9% and 30.2%, respectively. The stock has declined 28.1% year-to-date to close yesterday’s trading session at $62.94.
MRVL’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system.
The stock has a D grade for Value, Stability, and Quality. Click here to see the additional ratings for MRVL’s Growth, Sentiment, and Momentum.
Among the 96 stocks in the A-rated Semiconductor & Wireless Chip industry, MRVL is ranked #86.
SNOW shares were trading at $175.59 per share on Thursday afternoon, down $10.39 (-5.59%). Year-to-date, SNOW has declined -48.17%, versus a -7.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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