March brought volatility for many growth-dependent companies in the Nasdaq 100 index, and many big names saw their valuations tumble. Dramatic sell-offs can sometimes present life-changing opportunities for investors. On the other hand, it’s also true that stocks usually sell off for good reasons, and you can’t just pour money into companies with falling share prices and expect good results.
While the overall Nasdaq 100 index has battled back thanks to strong earnings news for some stocks, many growth-dependent companies have taken a big hit since the index reached its most recent high on Feb. 12. Peloton Interactive (NASDAQ:PTON), Moderna (NASDAQ:MRNA), and Baidu (NASDAQ:BIDU) were the index’s biggest losers from Feb. 12 to April 6 — with those stocks falling 29.5%, 29.3%, and 29%, respectively, across that stretch, according to data from S&P Capital IQ.
Should investors be buying up these beaten-down names? Let’s find out a bit more about these three worst performers.
1. Peloton Interactive
Peloton Interactive enjoyed a huge tailwind from the pandemic in 2020. With gyms closed and social distancing in place, demand for in-home exercise equipment soared. Peloton’s combination of hardware and connected-exercise services got a huge boost and enjoyed stellar growth, but March 2021 saw investors focus on which stocks look best positioned to thrive in a post-pandemic world.
Peloton was perfectly positioned to capitalize on an unexpected and unprecedented set of conditions, but as gyms start to reopen, the company’s products could seem less essential to a significant section of potential customers. While it’s reasonable to expect that the exercise innovator’s growth might be a bit uneven in the near term, relaxing social distancing probably won’t destroy its long-term opportunities.
Peloton might not be a post-pandemic recovery play, but the stock price already trades down roughly 36% from the 52-week high it hit in January, and the pullback could be overdone. The brand still looks very strong, and Peloton is a first mover in the connected exercise equipment space that still has a lot of room for growth.
The stock isn’t low risk by any stretch, but the business is executing at a high level, posting impressive growth, and recording strong gross margins. For investors with a buy-and-hold approach, Peloton could still be a winner.
Moderna stock posted huge gains in 2020 thanks to the excitement surrounding the company’s messenger RNA (mRNA) COVID-19 vaccine, with its share price skyrocketing 430% across the stretch. But the stock has pulled back since hitting a high of roughly $189 per share in February.
The biotech‘s share price is still up roughly 27% across 2021 even after the recent pullback. The company has contracts for $18.4 billion in COVID-19 vaccine this year, but there are questions about whether the stock’s momentum from that…
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