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(Boursier.com) – The index correction Nasdaq composite has accelerated since the beginning of 2022, bringing this Monday to 7% its drop compared to the last record, November 19, 2021. The index rich in technology stocks is approaching the technical correction zone, namely a drop of more than 10 % on recent highs. If we take into account the extreme levels during the session, the Nasdaq also briefly lost a little more than 10% on Monday during the session, before rebounding sharply, and ending up slightly (+ 0.05%).
If we look at the details of the movements within the US index, we can see that the giants of the sector have held up relatively well so far, but that a large part of the mid-caps have already suffered a brutal deflation of their value. value, which led experts last year to warn of a speculative bubble.
Falls greater than 50% already received
Thus, to date, no less than 40% of some 2,238 stocks making up the broad Nasdaq Composite index have already lost more than 50% of their value from their highs for a year, according to a note published by Sundial Capital Research. This plunge coincided with speculations of monetary tightening by the Fed, which will materialize in 2022.
However, growth stocks, in particular technology, are valued by financial analysts using the discounted future cash flow method, which depends on the level of interest rates. The higher the latter, the more expensive growth stocks appear to investors.
In addition, higher rates discourage speculation, which is often done with borrowed capital. The Fed’s ultra-accommodative monetary policy pursued since the 2020 Covid crisis has thus provided torrents of easy money for speculators, which should gradually dry up from 2022.
The giants of “tech” resisted the correction better
Industry giants have so far held up fairly well to the correction, as haveApple (-6% only compared to peaks), Microsoft (-9%) and Amazon (-14%). These three “Gafa” are the three largest market capitalizations of the composite Nasdaq, and represent respectively 9.9%, 8.6% and 7.5% of its weight, or about a quarter of its total market capitalization.
On the other hand, many other stocks which had exploded from 2020, taking advantage in particular of health confinements linked to the coronavirus, encountered in 2021 growth and supply chain problems, which weighed down their accounts and their stock market prices. This is particularly the case of the manufacturer of connected exercise bikes Interactive Platoon (-76% on its highs) or teleconferencing software Zoom Video (-49%).
High volatility on electric vehicles and “same stocks”
The speculative craze for start-ups in the autonomous and electric vehicle sector has also suddenly fallen, particularly on Power plug (hydrogen fuel cells -53%), Nikola (hydrogen trucks, -38%), Luminar Technologies (sensors for autonomous vehicles, -50%) or the Chinese manufacturer NIO (-50%), while the leader Tesla Motors is doing better despite a 20% drop from its peaks.
The “meme” stocks like Gamestop and AMC Entertainment, who experienced a euphoric episode at the start of 2021 thanks to individual investors present on stock market social networks, are now evolving very far from their 2021 records, even if they are still up sharply compared to the end of 2020.
Other speculative sectors that have already declined significantly include video games, collaborative work software, crypto-currency and blockchain-related stocks, and cannabis stocks. Cannabis producers Canopy Growth (-73%), Tilray (-48%) and Aurora Cannabis (-47%) have thus fallen very far from their highs of 2021.
Crypto and blockchain values linked to the volatility of bitcoin
As for values related to cryptocurrencies and blockchain, they experienced peaks in April and November 2021, when bitcoin prices soared, before experiencing a tumble in recent months. The mobile broker Robinhood, popular with the new generation of individual investors, has dropped 60% from its introductory price of $ 38 last July, and the “crypto” trading platform Coinbase, introduced at $ 250 in April, jumped to almost $ 360, before falling back to around $ 222 (-38%). Marathon Digital Holdings (-28% over 3 months) and Riot Blockchain (-21% over three months) are also moving in bearish ground.
Among video game publishers, Take-Two Interactive (-35% on its recent highs), Activision Blizzard (-30%) and Zynga (-37% during last Friday) have all declined compared to their peaks of the year 2021. A plunge in prices which has just been taken advantage of by Take-Two Interactive which announced on Monday the acquisition of Zynga for $ 12.7 billion. This led to a surge of more than 40% of the Zynga title on Monday on Wall Street, but a fall of 13.1% for Take-Two.