Netflix and Meta shares have seen their gains from the last five years nearly wiped out. Netflix so far in 2022 has been crashed 66% and Meta has fallen about 45%. Disappointing figures on users and rising interest rates have hurt high-growth tech stocks. Loading Something is loading.
This year’s rout in Netflix and Meta Platform shares has left them without much of the gains they’ve made over the last five years, with investors now assessing pivotal points in the business expansions for the streaming service and the social media company.
Netflix stock has plunged by 66% so far this year and Meta, formerly Facebook, has tumbled by 45%, with the losses weighing on the Nasdaq Composite. The tech-rich index is flirting again with bear market territory, and is down about 17% from its most-recent highs.
Netflix stock on Monday was trading around $206.60, while Meta was hovering near $184.30.
Meta will be back in focus on Wednesday with the release of its first-quarter results. Its fourth-quarter report released in February sparked a 25% plunge and left the company suffering the largest one-day valuation drop in US history, at $230 billion. The massive moves came after Meta’s results showed the first-ever decline in daily active users, losing 1 million between the third and fourth quarters of 2021.
The company is in the midst of a major rebranding as it has shifted its efforts to the so-called metaverse, pivoting from its core social media focus.
The last five years of stock and corporate growth at Meta including hitting an all-time high above $$384, notched just seven months ago. Investors will have a close eye on Meta’s DAU metric on Wednesday. Bank of America on Monday estimated 1.925 billion daily users in the first quarter, which is below the Street’s outlook of 1.95 billion users. BofA, which has a buy rating on the stock, said in a note it will seek “more clarity on why the Metaverse investment will have good returns for Facebook.”
While Meta works to ramp up its metaverse activities, investors showed major concern last week over Netflix’s loss of 200,000 subscribers in the first quarter. The video-streaming giant also expects to lose another 2 million subscribers in the current quarter. The stock sank 35% after the report and the company shed $54 billion of its market capitalization.
“Besides paid subscription challenges, NFLX says competition with linear TV and VOD providers has increased, and macro headwinds are evident from inflation and lower discretionary income,” said investment firm CFRA in a note last week downgrading Netflix to a hold rating from buy. “Higher view share is NFLX’s goal to drive double-digit revenue growth.”
Growth stocks have been pummeled this year as yields on US Treasury debt has soared on expectations for large and fast-paced interest-rate increases by the Federal Reserve . Higher yields can cut into the value of future profit at high-growth companies such as large-cap tech names.
The fed funds futures market estimates the Fed hiking rates nine or 10 more times in the next 12 months, including the potential for back-to-back hikes of 50 basis points in May and June, Morgan Stanley noted Monday. The 10-year yield last week reached near 3%, the highest since 2018.
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