4 Stocks and Industries That Moved the Market in May | personal financing
May was a rough time in the stock market, but investors can learn a lot from the main topics last month. If we understand the forces that affected stocks last month, then we can make informed predictions about the direction of the market. Here are some of the top stocks and industries that moved the market last month, and they illustrate important directions going forward.
shares Explode, Explode (NYSE: SNAP) It fell 50% in May. The social media stock started poorly along with other growth stocks, but things took a turn for the worse after CEO Evan Spiegel sent a pessimistic note to employees about the deterioration of Snap’s full-year outlook. Just a few weeks after the company reported disappointing first-quarter earnings, Spiegel warned employees it was likely to miss its revenue and earnings forecast. With growth challenged, the company is backing away from hiring plans. The lower outlook is attributed to a poor macroeconomic environment.
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Growth stocks are bearing the brunt of the market downturn this year. Not only do stocks reflect the expectations of declining companies, but investors’ declining risk tolerance drives valuations lower. This has a ripple effect hitting stock prices for companies like Snap. The forward price-to-earnings per share has fallen to 65, and the price-to-sales ratio has dropped to 5.2.
Snap has a tough road ahead for the next few months. However, the long-term outlook for the social media company hasn’t changed much. The new assessment may reflect a slight return to reasonable expectations, or it may represent a significant discount. Either way, the stock price is more attractive than it was six months ago to investors who love the business. There could be more room to slip down easily, but the balance of risk and reward has clearly changed. This was a common theme across growth stocks in the technology sector.
shares Queen Piece (NASDAQ: currency) It fell 30% in May after a poorly received earnings report. The company’s quarterly revenue is down 27% from a year earlier, and that sales number came in nearly 20% less than Wall Street forecast. Coinbase’s financial results are affected by lower cryptocurrency prices along with lower trading volumes. Bitcoin It fell 20% in May, and investor interest waned after last year’s enthusiasm.
Coinbase stocks are meanwhile struggling against downward pressure on both cryptocurrencies and growth stocks as riskier assets lose their footing in the capital markets. This is likely to continue as interest rates rise, so Coinbase stock is not out yet, although it is down nearly 70% from last year.
cyber security inventory
May was a particularly bad month for cybersecurity stocks. Industry leaders Cloud Flare (NYSE: NET)And the octaAnd the ZscalerAnd the CrowdStrike They all moved closely together throughout the month, all down 20%-35%.
Cloudflare reported better-than-expected results on May 5th. It saw sales growth of 54%, achieved an impressive net dollar retention of 127%, and increased full-year revenue expectations. Despite this, Cloudflare saw a selloff that coincided with other growth stocks, and other cybersecurity stocks fell with it.
Cybersecurity stocks are a perfect example of a technology that has grown over the past two years. The pandemic bull market sent high-potential stocks to incredibly high valuations, and since then those prices have fallen dramatically. The long-term growth potential for this industry remains exceptionally high, but the prices are much more attractive to investors today.
Energy stocks were a market saving boon last month. Stocks in this sector dominate the list of top gainers in May, along with a handful of stable dividend stocks. The SPDR ETF Energy Sector Selection It increased by 16%. Crude oil continued to rise, rising above $100 a barrel due to supply constraints in both the domestic and international markets.
Even after last month’s strong performance, the energy sector still accounts for only about 4% of Standard & Poor’s 500. Crude oil has continued to climb so far in June, and it seems unlikely that it will drop significantly in the near term. This may not be enough to continue pushing energy stocks higher, but there should be decent support for the sector. However, that may not be enough to offset problems in other industries in the leading indicators.
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Ryan Downey has no position in any of the listed stocks. Motley Fool has positions in and recommends Bitcoin and Cloudflare, Inc. and Coinbase Global, Inc. and CrowdStrike Holdings, Inc. and Okta and Zscaler. Motley Fool has a disclosure policy.