The Nasdaq has been on a tear this year, paced by excitement over artificial intelligence and a recovery from last year's steep sell-off.
That trend continued into June, with the tech-centric index rising 6.6% as signs showed that inflation continued to come down and the economy remained robust, with tech companies like Oracle posting stronger-than-expected results.
Nonetheless, not every Nasdaq stock was a winner last month. Let's look at the three of the worst-performing stocks in the Nasdaq 100 index to see if any are worth buying right now.
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1. CrowdStrike (down 8.3%)
CrowdStrike (CRWD +0.01%), the cloud cybersecurity software company, was the worst performer on the Nasdaq 100 last month as pressure remained on high-priced software stocks following the bear market plunge last year.
CrowdStrike, considered the leader in endpoint security software, disappointed the market with its first-quarter earnings report after hours on the last day of May. Consequently, the stock fell to start June and didn't recover those losses.
Although the company topped expectations and raised its forecast, it wasn't enough to dispel concerns about its valuation. Revenue in the quarter rose 42% to $692.6 million, and adjusted earnings per share reached $0.57, up from $0.31 in the quarter a year ago.
NASDAQ: CRWD
Key Data Points
Management said sales cycles are still taking longer, but the future remains bright as companies need its cybersecurity solutions.
For the full year, the company expects revenue of $3 billion to $3.04 billion, representing growth of about 35%. CrowdStrike's price-to-sales multiple has cooled to a more reasonable ratio of 11.3 based on that forecast, and the stock is up 37% this year, in line with the broader recovery in tech stocks. Still, it may take a clear recovery in demand for the stock to stage a full-fledged comeback.
2. Micron (down 7.5%)
Micron (MU +5.08%), a maker of memory chips, including DRAM and NAND, has been something of a poster child for the downturn in the semiconductor industry. Demand has slowed with a decline in PC sales, and excess inventory has led to price declines.
Micron's recent earnings report indicates that those challenges still remain. In its fiscal third-quarter earnings report for the period ended June 1, the company posted revenue of $3.75 billion, up slightly from the previous quarter, but down 57% from the quarter a year ago, though that was better than estimates.
NASDAQ: MU
Key Data Points
On the bottom line, the company posted an adjusted loss of $1.57 billion, or $1.43 per share, showing how much the pricing environment has deteriorated. Management said it believed that the memory chip sector has passed its trough in revenue, but it's wary of a new decision by the Cyberspace Administration of China (CAC), which ruled that Micron had failed its network security review and it would ban infrastructure companies from buying its chips. Management called the decision a "significant headwind that is impacting our outlook and slowing our recovery."
The company expects another loss in the fiscal fourth quarter, with sequential growth of 4% at the midpoint of its projection, showing the industry challenges persist. Although the business cycle should eventually shift, the challenges in China could put the recovery on hold. Over the long term, the stock should eventually rebound.
3. Atlassian (down 7.2%)
Finally, Atlassian (TEAM +2.65%) wraps up the worst performers on the Nasdaq 100 last month. The cloud-based collaboration software specialist has faced similar headwinds to CrowdStrike as investors have begun to scrutinize valuations in the sector more closely.
NASDAQ: TEAM
Key Data Points
There was little company-specific news out on Atlassian last month, but investor skepticism toward the maker of Jira and Trello seemed to remain after it posted slowing growth in its fiscal third-quarter earnings for the period ended March 31, with revenue up 24% to $915.5 million. Cloud growth continued to slow and was driven in part by on-premise customers transitioning to the cloud.
Atlassian now trades at a price-to-sales ratio of less than 13. That's down significantly from its peak, but it's still pricey for a company that consistently reports net losses according to generally accepted accounting principles (GAAP).
Investors should look for a recovery in cloud growth before considering the stock a buy.
