Netflix shares lost more than 20% on Wall Street on Friday, penalized by a nervous market that attacks the fetish stocks of the pandemic, whose growth is now deemed insufficient.
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In seconds, investors erased nearly $40 billion from Netflix’s valuation when the Nasdaq electronic stock market opened. Around 1:30 GMT, the title dropped 21.26%.
In question, the forecast announced Thursday by the online video service, which expects a net increase of 2.5 million subscribers in the first quarter, which would constitute the most modest increase for the first three months of the year. since 2010.
Among the big winners of the coronavirus era, with a net gain of 55 million subscribers in two years, Netflix has been out of favor with investors for several months already. The stock is down 43% from its peak in mid-November.
And the platform is far from alone in this case. “Today, it’s nuclear material, it’s radioactive,” said Kim Forrest, head of investment at management company Bokeh Capital Partners.
“Netflix, Amazon, PayPal, eBay, Etsy, these titles are already down 20 to 50%, because people have left their homes,” explains Gregori Volokhine, president of Meeschaert Financial Services. “It is not today that we discover that the big effect of the confinements is behind us.”
The most striking example of this exit from the pandemic is undoubtedly Peloton.
On Thursday, the specialist in high-end exercise bikes and treadmills collapsed on the stock market, losing up to 26% after the announcement by the CNBC channel that the group was suspending production to deal with a slowdown in demand.
Peloton did not confirm, but did report a “recalibration of (its) production”, associated with layoffs.
“In theory, these are growth stocks,” said Kim Forrest. “Earnings had to go up for the share price back to earnings to become more tolerable. But if they don’t grow anymore…”
However, analysts caution against comparing growth stocks to each other, as business models may differ dramatically.
“Netflix’s engine is still running,” Pivotal Research analyst Jeffrey Wlodarczak wrote in a note, “but it’s running at a slower pace, knowing the giant leap the pandemic has allowed it” in subscribers. . He expects, in the medium term, a “normalization” of the group’s growth.
“It’s a bit the same reasoning with Zoom,” continues Gregori Volokhine, about the videoconferencing platform whose name has been on everyone’s lips since March 2020. “People continue to use it, and even more and more more, except that we already have Zoom. The market can only go down, in a way.”
Others will probably fare less well, analysts warn. “For me, Peloton is over,” says Gregori Volokhine. “It’s a stock that’s going to go zero.”
In addition to suffering from the return of outdoor sports and the revival of sports clubs, “their bikes, everyone can copy them,” he says. “It’s starting, by the way.”
Solid or fragile, since November, it is nevertheless all of the technological stocks which are caught in a headwind, which is blowing the American Central Bank (Fed).
With the prospect of monetary tightening and several interest rate hikes, “there will be less liquidity than there was for the past 18 months,” said Zachary Hill, head of macro strategy at Horizon Investments. “And it’s going to weigh most heavily on the areas of the market that have benefited the most.”
The speculative nature of certain movements, favored by the abundance of funds to invest, has contributed to the surge in the number of securities, which are landing today, not always smoothly.
However, “it is a mistake, in the medium term, to transpose this reasoning to the largest capitalizations of tech”, warns Zachary Hill, like Apple, Amazon or Microsoft. “There is a fundamental difference between a speculative growth stock and a machine to generate cash around the world.”
For the moment, summarizes Gregori Volokhine, “we sell because it would be too expensive in a recession”, in an economy which slows down, moreover with a Fed which raises its rates. “If we start to have bad economic statistics, prevention is better than cure.”