The stock market had another strong year, with all the major averages posting gains of over 20%. But beneath the surface, there has been considerable trauma for tech stocks. One clue that conditions weren’t quite perfect for the group is that the
S&P 500 Index is on track to outperform the tech-rich
for the full year for the first time since 2016.
To detail the main trends among the worst performers of the year, I ran two screens on FactSet. I started with the tech laggards among the S&P 500 stocks, and this approach revealed some clear and surprising trends. But that screen left out some of the worst declines of the year, so I threw up a second screen, focused on Nasdaq Composite stocks, and that’s where the really ugly things emerged. (Note that because the year isn’t quite over, some price changes may be slightly lower than current levels as you read this.)
Among S&P 500 technology stocks, the worst performance was
), which, as the name suggests, is a payment processor. The stock is down 38% for the year to date. But Global Payments isn’t out of place – it’s been a bad year for the payment processor in general.
Fidelity National Information Services
(FIS), a publisher of banking and payment processing software, is down 23%,
(FLT), another payment processor, is down 18%,
(PYPL) is down 18%,
(FISV) is 8%, and
is down 6%. Recently slashing his estimates on global payments, Wedbush analyst Moshe Katri pointed to consumer spending “shocked”, continuing downturns in retail stores and travel linked to the pandemic, and “spending likely to be reduced for non-discretionary items “, taking into account rising prices for basic consumer goods. .
Video games also posted widespread losses, with shares of
(ATVI) down 29.5%,
(TTWO) 14% off, and
) down 7%. Activision’s slide reflected in part an ongoing sexual misconduct scandal that has prompted some analysts to call for CEO Bobby Kotick’s resignation. But that’s not the only problem. It was supposed to be a big year for the industry, but component shortages made it harder for consumers to get new video game consoles. Meanwhile, the current buzz on the Metaverse has shifted the spotlight to games perceived as “metaverse” such as
(RLBX), which saw stocks rise 33%, and move away from legacy game publishers.
The S&P 500 latecomers list is also peppered with cable TV and broadcast players trying to switch to streaming, with shares of
(VIAC) down 19%,
) by 19%, and
(DIS) 16% less. The challenge: to manage a declining linear TV business while creating a profitable streaming model in a highly competitive environment and with movie theaters struggling to regain consumer support. Chief nemesis
(NFLX) is up 17% for the year.
Also in the niche: telcos. Actions of
(T) are down 14%,
US (TMUS) are down 12%, and
Communications (VZ) are 10% lower. The fierce competition for subscribers leads to aggressive discounts on mobile phones which is good for
(AAPL) and for consumers, but less so for carriers. Actions of
(CMCSA), which has both a significant content business and competes with video and broadband customer operators, is down about 4%.
(CTXS) shares fell 27%, despite a recent Bloomberg report that investment firms Elliot Investment Management and Vista Equity Partners are considering an offer to privatize the software company. The company reported disappointing growth amid challenges to transition to a cloud-based software model. Also among the 10 Worst Technology Performances of the S&P 500: Optical Network Company
(IPGP), down 23%, and
(TWTR), down 18%, where founder Jack Dorsey recently stepped down as CEO.
On the Nasdaq, you can find over 100 stocks with cumulative losses of over 40%. Here are also some clear trends.
Newly opened businesses have struggled widely, no
(WISH), the parent company of discount e-commerce site Wish.com. The stock, which was the subject of an initial public offering in December 2020, is down 82%, making it one of the worst performances of the year.
(VLDR), which went public through the SPAC – Special Purpose Acquisition Company – merger last July, is down 77%.
Many pandemic-era darlings who soared in 2020 have fallen to earth in 2021. This group includes a struggling stationary bike company
(PTON), down 76%, used car salesperson
), 74% and videoconferencing company
Focus on video communications
(ZM), down 44%.
Also taking a bit of heat: Many high-flying business software games, as investors moved away from stocks with very high valuations. Actions of
) are down 55%,
(COUP) are at 52%,
(FROG) are down 51%,
(SUMO) are 50% off, and
Holdings (BIGC) are down 41%.
Also, no surprise has been the sharp decline in many US-listed stocks of companies based in China, given that country’s crackdown on the internet industry. Among the least efficient: the video platform
), down 74%; the retailer
), 68%; and enterprise software provider
Kingsoft Cloud Holdings
(KC), down 65%.
Other notable drops on the Nasdaq include clothing retailer
(SFIX), down 66% in the context of a change in the company’s economic model; and
(ZG), down 55% in part due to the company’s unexpected decision to exit the iBuyer single-family home market. Rival zillow
) fell by 42%.
Write to Eric J. Savitz at [email protected]