Tech’s Worst 2021 Performers Include Telco, Videogame, and Payments Stocks

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Double-digit declines for former pandemic-play darlings Peloton and Zoom Video Sport 2021-and they aren’t even the worst performers in tech.

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The stock market has had another good year, with all major averages showing gains of over 20%. But beneath the surface, there has been considerable blowback for technology stocks. One clue that conditions weren’t quite right for the group is that the S&P 500 index is on track to outperform the tech-rich Nasdaq Composite for the first time since 2016.

To detail key trends among the year’s worst performers, I ran two screens on FactSet. I started with the technical lag in the S&P 500 stocks, and that outlook produced some clear and surprising trends. But that screen skipped some of the year’s worst declines, so I ran a second screen, focusing on stocks in the Nasdaq Composite—and that’s where the really ugly stuff emerged. (Note that because the year isn’t over yet, some price movements may slightly detract from current levels as you read this.)

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Among the tech stocks in the S&P 500, the worst performer was Global Payments (ticker: GPN), as the name suggests, a payments-processing company. The stock is up 38% for the year so far. But global payments is no outsider—it was a rotten year for payment processors in general. Fidelity National Information Services (FIS), a provider of banking and payment-processing software, was down 23%, Fleetcore Technologies (FLT), another payment processor, is down 18%, PayPal Holdings (PYPL) is down 18%, Fiserv (FISV) 8% and Paycom Software is down 6%. Recently lowering his projections on Global Payments, Wedbush analyst Moshe Cuttery noted “choppy” consumer spending, the pandemic-related retail-store and travel slowdown, and “non-discretionary goods,” noting rising prices for consumer goods. but pointed to reduction in expenditure”. ,

Videogames also showed widespread losses, with shares of Activision Blizzard (ATVI) down 29.5%, Take-Two Interactive (TTWO) down 14% and Electronic Arts (EA) down 7%. Activision’s slide in part reflected an overt sexual misconduct scandal that prompted some analysts to resign CEO Bobby Kotick. But this is not the only issue. It was supposed to be a big year for the industry, but component shortages made it harder for consumers to acquire new videogame consoles. Meanwhile, the current discussion about the Metaverse has shifted the gaming spotlight to alleged “Metaverse” plays such as Roblox (RLBX), which saw shares jump 33%, and away from legacy game publishers.

The S&P 500 laggard list is also dotted with cable and broadcast TV players trying to make the switch to streaming, with ViacomCBS (VIAC) shares 19%, Discovery (DISCA) shares 19% and Walt Disney ( DIS) shares are down 16%. , The Challenge: Manage a declining linear TV business with movie theaters struggling to gain consumer support, and create a profitable streaming model in a highly competitive environment. Mainstream nemesis Netflix (NFLX) is up 17% for the year.

Also in the doghouse: Telecom. AT&T (T) shares are down 14%, T-Mobile US (TMUS) is down 12%, and Verizon Communications (VZ) is down 10%. Fierce competition for customers is offering aggressive discounts on mobile phones, which is good for Apple (AAPL) and consumers, but less good for carriers. Shares of Comcast (CMCSA), which has a large content business and competes with the carrier for video and broadband customers, is down about 4%.

Shares of Citrix Systems (CTXS) are down 27% despite a recent Businesshala report that investment firms Elliott Investment Management and Vista Equity Partners are considering a bid to take the software company private. The company is reporting disappointing growth amid difficulties moving to a cloud-based software model. Among the 10 worst tech performers in the S&P 500: optical-networking company IPG Photonics (IPGP), down 23%, and Twitter (TWTR), down 18%, where founder Jack Dorsey recently took over as CEO. left.

On the Nasdaq, you can find more than 100 stocks with year-over-year losses of more than 40%. Here too, there are some clear trends.

New public companies have largely struggled, with nothing more than ContextLogic (WISH), the parent of discount e-commerce site The stock, which had a December 2020 initial public offering, is down a staggering 82%, making it one of the year’s worst performers. Velodyne lidar (VLDR), which went public last July via a SPAC-special-purpose acquisition company-merger, is down 77%.

Many pandemic-era darlings that rose in 2020 fell to earth in 2021. That group includes struggling stationary bike company Peloton Interactive (Pton), down 76%, used car vendor Voom (VRM), up 74%, and videoconferencing company Zoom Video Communications. (ZM), down 44%.

Something’s taking heat, too: Several high-flying venture-software plays, as investors shied away from extra-high valuation stocks. Shares of Appian (APPN) are down 55%, Coupa Software (COUP) is down 52%, JFrog (FROG) is down 51%, Sumo Logic (SUMO) is down 50%, and BigCommerce Holdings (BIGC) is down 41%. . ,

Furthermore, the sharp decline in many US-listed stocks of companies based in China was no surprise, given the country’s action in the Internet sector. Among the worst performers: video platform IQIYI (IQ), down 74%; Retailer Pinduoduo (PDD), 68% off; and enterprise software provider Kingsoft Cloud Holdings (KC), down 65%.

Other notable Nasdaq drops include apparel retailer Stitch Fix (SFIX), a 66% discount amid a change in the company’s business model; and Zillow Group (ZG), down 55%, due to the company’s unexpected decision to withdraw from the iBuyer single-family home market. Zillow rival Redfin (RDFN) was down 42%.

Eric J. Write Savitz to [email protected]


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