Waiting for Netflix and other fallen S&P 500 stocks to bounce back from their epic crashes? Hope you have a big bag of popcorn and lots of time to wait — like four years.
It could take up to five years for some of the S&P 500's biggest implosions, including Netflix, PayPal and Penn National Gaming to bounce back to their highs, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's if the stocks gain at the same pace they did in the five years from 2017 through 2021.
To be sure, this analysis is just an estimate. It's possible some of these battered S&P 500 stocks will turn on the jets and rally even faster than they did before. It's equally likely they might stall or fall further. But it's an estimate based on stock-specific data rooted in years of recent market history.
Following the S&P 500's epic decline this year, it's only natural for investors to wonder how long they might wait for a recovery. And of course, savvy growth stock investors know to wait until there's a confirmed uptrend.
"The usual suspects of a slowing economy, a hawkish Federal Reserve Bank, supply chain worries, war in Europe, and now another China shutdown have all combined to make this one of the worst starts to a year ever for both stocks and bonds," says Ryan Detrick of LPL Financial.
Waiting For Netflix's S&P 500 Recovery
The Netflix crash is one of the year's big S&P 500 surprises. Shares are down more than 73% from their 52-week high of 700.99 to just 187.69 as competition for streaming customers heats up. But given how far it's fallen, making up lost ground could take Netflix stock a long time.
It's true Netflix can be an explosive stock on the upside. Shares of the online streamer shot up 37.2% annualized from 2017 through 2021. That makes it one of the top-performing S&P 500 stock in that time. To put Netflix's past run in perspective, consider that it's more than twice the SPDR S&P 500 ETF Trust's 16.3% annualized gain in that time.
But Netflix's hole is so deep, the recovery could take a long time even if its stock regains its winning ways. To be exact? It would take 4.2 years, or four years and a little more than two months to retake its 700.99 high if it rallies like it did from 2017 to 2021. Even usually bullish analysts are realistic about when you might see those old highs again. Analysts' price target only calls for the stock to return to 347.49 in 12 months time, which is still down 50% from the high.
Biding Your Time At PayPal
Online payments company PayPal remains the biggest implosion on the S&P 500 this year. The road back will likely take a long time, too.
Shares are down roughly 75% from the 310.16 high. Like Netflix, PayPal had been a strong stock. From 2007 through 2021, shares rocketed 36.7% a year on average. But again, even if that strong rate of return were to return, it would take 4.4 years, or four years and five months, to retake the old high. Analysts, again, seems to think this will be a multi-year recovery. Analysts think the stock will only rise roughly 56% in the next 12 months to 122.75. That would only return the stock to 39% of its former self.
Some fallen stocks' recovery times are harder to estimate. Moderna lacks five years of trading history, so there's less to go on. And some of the stocks that dropped huge amounts from their highs, like Under Armour and Biogen, fell from 2017 through 2021. If that continues, theoretically, they'll never recover return to those heights (lacking a stock split).
But what about the whole S&P 500? How long would it take to recover its 52-week high? Expect a roughly year's wait, excluding dividends. That's based on how long it would take the SPDR S&P 500 ETF Trust to make up its 15.5% drop if it continues to rise by 16.3% per year.
Keep in mind, though, the S&P 500 usually gains just 10% annually (including dividends). At that rate, you'll have to wait longer. But it's still better than waiting on Netflix.
Waiting Game For S&P 500 Recoveries
Projected time to retake 52-week highs based on annualized gains from 2017 to 2021
| Company | Ticker | Ch. From 52-week high | Annualized % gain (past five years) | Time to recover (years) |
|---|---|---|---|---|
| PayPal Holdings | -74.6% | 36.7% | 4.4 | |
| Netflix | -73.2 | 37.2 | 4.2 | |
| Moderna | -72.3 | n/a* | n/a* | |
| Etsy | -70.1 | 79.4 | 2.1 | |
| Penn National Gaming | -63.8 | 30.3 | 3.8 | |
| Align Technology | -62.6 | 46.9 | 2.6 | |
| Under Armour | -59.5 | -6.1 | n/a** | |
| Biogen | -57.5 | -3.3 | n/a** | |
| Match Group | -57.4 | n/a* | n/a* | |
| Generac Holdings | -56.8 | 53.9 | 1.9 | |
| SPDR S&P 500 ETF | -16.3 | 16.3 | 1.2 |
Sources: IBD, S&P Global Market Intelligence, *- lacks five years of trading, ** - stock down from 2017 - 2021
