Of the 3,634 stocks that make up the Nasdaq Composite index, more than 2,000 have underperformed the S&P 500 so far in 2022. Nearly 1,300 have underperformed the S&P by 25% or more, while a staggering 637 have underperformed by at least 50%.
In simple terms, high-growth technology stocks have largely been crushed in the recent market downturn, and the Nasdaq has a disproportionately high amount of them.
To be fair, some of the stocks in the Nasdaq Composite are tiny companies, but even some of the larger and more well-known businesses have been beaten down. Even if we narrow it down to stocks with a $1 billion market cap or greater, there are 60 different companies that have underperformed the S&P 500 by more than 50 percentage points this year. Here are the bottom 10 and what investors need to consider before buying any of them.
The worst performing Nasdaq stocks of 2022
Without further delay, here are the 10 worst-performing stocks on the Nasdaq this year with market caps of $1 billion or greater:
|
Company (Symbol) |
Industry |
Total Returns Year-to-Date |
|---|---|---|
|
Upstart (UPST +13.04%) |
Fintech |
(84%) |
|
GoodRx (GDRX +4.26%) |
Healthcare |
(82%) |
|
Kornit Digital (KRNT 0.06%) |
Hardware |
(82%) |
|
TuSimple Holdings (TSP +0.00%) |
Automotive |
(80%) |
|
Novavax (NVAX +3.58%) |
Pharmaceuticals |
(80%) |
|
Matterport (MTTR +0.00%) |
Software |
(79%) |
|
10X Genomics (TXG +2.22%) |
Pharmaceuticals |
(79%) |
|
Aurora Innovation (AUR +13.49%) |
Automotive |
(78%) |
|
Affirm (AFRM +6.81%) |
Fintech |
(78%) |
|
Coinbase (COIN +6.23%) |
Cryptocurrencies |
(75%) |
Data source: YCharts. Returns through 9/7/2022 before market open. Parentheses indicate negative numbers.
Why have these companies been hit so hard?
For the most part, the stocks you see on this list were some of the highest-performing names of 2020 and 2021. In fact, the worst performer on the list, Upstart, is still up from its IPO price of $20 per share in December 2020 after losing 84% of its value this year.
NASDAQ: UPST
Key Data Points
Having said that, this isn't a pullback for no reason. In the case of Upstart and the other fintech on the list, Affirm, both are lending technology platforms, and there's a risk of increased loan defaults as the economy slows down. TuSimple and Aurora Innovation both produce autonomous vehicle technology, and growth in that industry has been somewhat slower than investors had expected. Coinbase's fee-based cryptocurrency exchange business has understandably suffered as digital currencies have declined in value significantly this year.
NASDAQ: COIN
Key Data Points
I could go on. But the point is that most of the stocks on the list performed very well in the low interest rate and speculative investment environments of the past couple of years but are facing significant headwinds this year and have been under more pressure than most other stocks.
Should investors buy these stocks now?
The short answer is, "it depends." It's never a great idea to buy any stock just because it went down. It's important for investors to distinguish between good businesses that have fallen out of favor and stocks that have plunged because of serious trouble in their businesses.
With that in mind, these stocks should be evaluated on a case-by-case basis, and if the business fundamentals are strong, they could certainly be worth a look. As one example, I recently added shares of Upstart to my portfolio because the business has grown tremendously, has excellent financials, and has a massive addressable market. But I personally wouldn't touch Affirm because buy now, pay later isn't likely to perform well at all during a recession and could lead to massive losses.
Of course, that's just a brief look at two of the stocks on the list. But if you're interested in finding great businesses at a discount and want to use this list as a starting point, be sure to take a long look at the business first.
