A humorous look at the companies that caught our eye, for better or worse, this week
Netflix (DOG)
NFLX - Nasdaq
Coming soon to Netflix: Margin Call. It’s the harrowing tale of an investor who borrows heavily to invest in technology stocks, only to see his biggest holding – Netflix – get crushed after the company’s first-quarter growth forecast badly misses estimates. Netflix management attributes the tepid subscriber guidance to factors including the pandemic and a “back-end weighted content slate,” and admits that “added competition may be affecting our marginal growth some.” With Netflix’s shares tumbling as much as 25 per cent, the rattled investor must either add funds to his account or sell some of his securities to meet his broker’s margin call. This stock market thriller will take you on a ride you won’t forget. Based on a true story.
Activision Blizzard (STAR)
ATVI - Nasdaq
Fun: pumping your enemies full of lead in Call of Duty. More fun: owning shares of Activision Blizzard, the company that makes Call of Duty and other popular video games including World of Warcraft and Candy Crush. The shares soared after the software developer – whose stock had been under pressure amid allegations of workplace discrimination and sexual misconduct – agreed to be acquired by Microsoft in a blockbuster US$68.7-billion deal that will transform the Xbox maker into one of the biggest players in gaming. Kids, stop wasting your life playing video games. Invest in them, instead.
Nasdaq Composite Index (DOG)
Soaring technology stocks are so last year. On Wednesday – two months to the day after the Nasdaq Composite closed at a record high in November – the tech-heavy index officially entered correction territory, defined as a drop of at least 10 per cent from its peak. With inflation surging, bond yields rising and central banks signalling multiple rate hikes this year, investors have been reassessing the lofty valuations of many high-growth tech companies, sending prices sharply lower. Now’s your chance to pick up Tesla at the bargain price of just 100 times estimated 2022 earnings.
Peloton Interactive (DOG)
PTON - Nasdaq
Peloton Interactive investors are feeling the burn all right – in their wallets. Shares of the company – whose internet-connected fitness bikes and treadmills were all the rage during the early stages of the pandemic – extended their year-long slide after internal documents revealed Peloton is slowing or suspending production to reduce inventories. With demand for its products waning as gyms reopen and competition heats up, the documents obtained by CNBC indicate that Peloton’s sales expectations for its fiscal third and fourth quarters were too high, leaving thousands of bikes and treadmills sitting in warehouses or on cargo ships. The company took issue with certain details of the CNBC report, but somewhere a short seller is smiling, no doubt.
Casper Sleep (STAR)
CSPR - NYSE
The good news is that Casper Sleep’s stock rose this week. The bad news? The past two years have still been a nightmare for investors. After the mattress-in-a-box company went public in February, 2020, the shares fell out of bed as weakening demand, rising costs, heavy competition and supply chain turmoil all took a toll on the stock. This week, shareholders approved a previously announced US$286-million offer from Durational Capital Management to take Casper private at US$6.90 a share – well below its IPO price of US$12. Well, at least the nightmare is over.
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John Heinzl