The Crashes That Nobody’s Talking About

The stock market is having a very good year. The S&P 500 printed 53 new all-time highs through the end of August, which is the most to that point in any year ever. Year-to-date, the index is up more than 20%.

But as always, you have to look inside the index to understand that not every stock is moving in the same direction.

The top 25 stocks by market cap, or 5% of the index, are responsible for 55% of the gains. This is fairly normal, nothing to be alarmed by. With the index up so much, you would expect most stocks to be doing well, which is more or less the case. Only 78 names are down on the year. Five stocks are up for every one that is down.

In a bull market, it’s easy to lose sight of the fact that not every stock is keeping up. Some are even crashing. Today I want to shine the spotlight on some names that are getting rekt.

GameStop is the poster child of meme stock mania. It’s 57% below its highs.

Remember when Zoom had a larger market cap than Exxon? 125 times revenue can have that sort of effect. The stock is 50% off its highs.

Fastly, a software company, gained 335% last year, making it one of the best-performing stocks in the Russell 1000. It’s now 68% below its highs.

Lemonade, “insurance built for the 21st century”, was one of the best performing IPOs of 2020, gaining 139% on the day. The stock is in a 61% drawdown.

Virgin Galactic, one of the best performing SPACs in 2020, is down 61% from its highs. And that’s better than it was in the spring when it lost nearly three-quarters of its value.

Remember Plug Power? That stock gained nearly 1000% in 2020. It’s 67% below its high.

Penn National Gaming, the company that bought Barstool, got cut in half. Beyond Meat got cut in half. Teladoc got cut in half. So did RingCentral, Palanatir, Opendoor and Zillow.

If it feels like the market is high on its own supply, remember that it’s a market of stocks, not just a stock market (*jumps out of window*).

I get why people aren’t talking about these names. They’re not big enough to move the market, and the market is still doing well.

When the stock market is going up, people pay attention to the index. When the stock market is going down people, pay attention to their stocks.

We got into this and much more on this week’s Compound and Friends.

 

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