The stock market bounced back in November, erasing some of the losses incurred earlier this year. Some of the highest-profile companies had big moves following earnings and major news from the Fed. These five stocks were some of the biggest winners and losers last month, and they illustrate important themes in the market today.
1. Roblox
Roblox (RBLX -3.66%) reported third-quarter earnings on Nov. 9, causing the stock to drop sharply. The company reported substantial increases in users, bookings, and engaged hours, but revenue only rose 2%. That sales figure was nearly 25% lower than consensus estimates. Large increases in operating expenses also led to $300 million in quarterly net losses.
The company reported lower bookings per active daily user, so it seems to be losing momentum with its user base. Investors are starting to worry kids will spend less time gaming as people resume travel and other activities outside of the home.
The stock is down nearly 70% year to date as rising interest rates are pushing investors away from growth stocks. There were some positive aspects of the earnings report obscured by the negative reaction. Strong bookings drove positive free cash flow for the quarter, and that's a strong signal for revenue growth in the future. The stock trades at a more reasonable valuation now, so it won't have to meet unreasonable expectations to deliver returns moving forward.
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2. Lucid Group
Luxury electric vehicle (EV) maker Lucid Group (LCID 1.19%) endured a difficult November as shares slumped 25% in the weeks following its third-quarter earnings report. The company missed Wall Street's estimates for both revenue and earnings, despite delivering growth in production and deliveries. The company's commentary also revealed that its backlog of reservations had declined, which is never welcome news for a growth stock.
High interest rates continued to weigh on growth stocks last month, so Lucid was certainly affected. However, disruptors in the EV industry are also struggling with investor concerns about the cost of capital. It's expensive to develop and manufacture automobiles, and it takes a lot of cash to get these businesses to scale, even if they execute well. High interest rates increase financing costs, creating extra risk for Lucid at this stage.
Lucid's high-profile peer Tesla struggled with the same issues last month. While Tesla's decline was a more modest 14%, that wiped out nearly $100 billion in market cap from major indexes due to the company's massive scale.
3. Etsy
Etsy (ETSY -2.17%) shares surged 41% after smashing analysts' estimates for adjusted earnings and revenue. Beating consensus estimates is great, but Etsy's full-year outlook was just as important. The company's fourth-quarter outlook indicates it can sustain the momentum moving forward, which is welcome news amid concerns about e-commerce stocks in general. Investors are worried the industry will be affected by weak consumer spending and shoppers returning to stores. Etsy's results have bred some optimism for the e-commerce industry as a whole.
The stock has enjoyed a few positive months in a row following its steep sell-off that started last year. Growth stocks and stay-at-home stocks rose to unsustainably high valuations during the pandemic before collapsing, and Etsy fits into both categories. Its forward price-to-earnings (P/E) ratio briefly dropped below 20 before bouncing back to its current level of around 31. At its previously discounted price, Etsy was priced to deliver long-term gains. That helped fuel the stock's rally.
4. Meta Platforms
Meta Platforms (META -0.52%) is another popular tech stock that enjoyed a rebound last month. The stock was crushed in October following a terrible earnings report, but it climbed 27% in November after announcing plans to cut roughly 10% of its labor force. Investors were highly concerned about the company's slowing growth and profitability, so slashing expenses was a popular move. Meta gained even more momentum after receiving an analyst upgrade and a vote of confidence from the Saudi Arabia Public Investment Fund.
Big sell-offs triggered by bad news are often followed by a partial recovery. That seems to be what's happening here. Growth investors sold Meta after a disastrous earnings report, then bullish investors offered support at lower valuation levels. With Meta down 66% year to date, credible voices in the finance world indicated the stock was too cheap to ignore.
5. AMD
AMD (AMD -0.35%) climbed 29% in November thanks to good news about its data center products and positive momentum for semiconductor stocks in general. The company's quarterly earnings announcement wasn't especially strong, but it reported excellent growth in its server products.
The data center market is a huge opportunity that has Wall Street feeling optimistic. A positive interim sales report from Taiwan Semiconductor added fuel to the fire, because it indicated that demand for semiconductors is better than analysts had predicted.
AMD was also priced attractively coming into the month. Even after the rally, the stock's forward P/E ratio is still under 20. That helped the stock bounce so much on moderately positive news. It faces stiff competition from several high-profile peers, and the next few quarters will continue to be difficult in consumer electronics. Don't be shocked if this cyclical stock experiences some volatility in the short term.
