The stock market rebounded in November, erasing some of the losses suffered earlier this year. Some of the most prominent companies have had big changes following earnings and important news from the Fed. These five stocks were among the biggest winners and losers over the past month, and they illustrate important themes in the market today.
Roblox (RBLX -0.88%) released its third-quarter results on Nov. 9, sending the stock down sharply. The company reported a substantial increase in users, bookings, and committed hours, but revenue grew only 2%. This turnover was nearly 25% lower than consensus estimates. Sharp increases in operating expenses also resulted in quarterly net losses of $300 million.
The company reported a drop in bookings per daily active user, so it appears to be losing momentum with its user base. Investors are starting to worry that kids are spending less time playing as people resume travel and other activities outside the home.
The stock is down nearly 70% year-to-date as rising interest rates drive investors away from growth stocks. Some positive aspects of the earnings report were clouded by the negative reaction. Strong bookings generated positive free cash flow for the quarter, and this is a strong signal for revenue growth going forward. The stock is trading at a more reasonable valuation now, so it won’t have to meet unreasonable expectations to generate returns in the future.
2. Lucid Group
Manufacturer of luxury electric vehicles (EV) Lucid Group (LCID) endured a tough November as stocks fell 25% in the weeks following its third-quarter earnings report. The company missed Wall Street estimates for revenue and profit, despite growing production and shipments. The company’s commentary also revealed that its backlog of bookings has shrunk, which is never good news for a growth title.
High interest rates continued to weigh on growth stocks last month, so Lucid was certainly affected. However, disruptors in the electric vehicle industry are also grappling with investor concerns over the cost of capital. It is expensive to develop and manufacture automobiles, and it takes a lot of money to scale these companies, even if they are successful. High interest rates increase funding costs, creating additional risk for Lucid at this point.
Lucid’s high-level peer You’re here struggling with the same issues last month. While Tesla’s decline was a more modest 14%, it wiped nearly $100 billion in market capitalization from major indexes due to the company’s massive scale.
Etsy (ETSY -5.74%) shares jumped 41% after smashing analyst estimates for earnings and adjusted revenue. Beating consensus estimates is great, but Etsy’s outlook for the full year was just as important. The company’s outlook for the fourth quarter indicates that it can maintain momentum going forward, which is good news amid concerns about e-commerce stocks in general. Investors fear the industry could be hurt by weak consumer spending and shoppers returning to stores. Etsy’s results have raised some optimism for the e-commerce industry as a whole.
The stock has had a few positive months in a row after its strong sell-off that began last year. Growth stocks and stay-at-home stocks hit unsustainable valuations during the pandemic before crashing, and Etsy fits into both categories. Its forward price-to-earnings (P/E) ratio briefly dipped below 20 before bouncing back to its current level of around 31. At its previously discounted price, Etsy was set to generate long-term gains. This helped fuel the stock rally.
Metaplatforms (META 0.49%) is another popular tech title that has seen a rebound in the past month. The stock crashed in October following a dire earnings report, but soared 27% in November after announcing plans to cut around 10% of its workforce. Investors were very concerned about the company’s slowing growth and profitability, so cutting expenses was a popular move. Meta gained even more momentum after receiving an upgrade from analysts and a vote of confidence from Saudi Arabia’s Public Investment Fund.
Large selloffs triggered by bad news are often followed by a partial rally. That seems to be what’s going on here. Growth investors sold Meta after a disastrous earnings report, then bull investors offered support at lower valuation levels. With Meta down 66% year-to-date, credible voices in the financial world have said the stock is too cheap to ignore.
AMD (AMD -2.67%) climbed 29% in November on good news about its data center products and positive momentum for semiconductor stocks in general. The company’s quarterly earnings announcement wasn’t particularly strong, but it reported excellent growth in its server products.
The data center market is a huge opportunity that has Wall Street bullish. A positive interim sales report of Taiwan semiconductor added fuel to the fire as it indicated demand for semiconductors was better than analysts had predicted.
AMD was also offered at an attractive price earlier this month. Even after the rally, the stock’s price/earnings ratio is still below 20. This helped the stock a lot to rebound on moderately positive news. It faces fierce competition from several top peers, and the coming quarters will continue to be tough in consumer electronics. Don’t be shocked if this cyclical stock experiences some short-term volatility.
Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Ryan Downie has no position in the stocks mentioned. The Motley Fool holds posts and recommends Advanced Micro Devices, Etsy, Meta Platforms, Roblox, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
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