Destroy the kings of 2022

Still, analysts expect a rebound in 2023, with a majority having buy ratings and the average price target implying upside potential of 26 percent.

Coinbase Global

It’s been a disastrous year for cryptocurrency-exposed stocks as digital tokens have been hit by a series of explosions, including the collapse of a so-called stablecoin in May and the demise of crypto exchange FTX in November.

And as the largest public U.S. crypto exchange, Coinbase is among the hardest hit as investors pull coins from exchanges or exit the asset class as a whole. The stock’s 87 percent plunge this year wiped out about $47 billion in market value.

Owning Coinbase stock is “a bet on the entire crypto token ecosystem,” according to Dan Dolev, an analyst at Mizuho Securities, who has an underperform rating on the stock. “You’re better off just owning bitcoin if you believe in bitcoin,” he said.

Not all analysts are so gloomy, as the average price target implies the stock is set to more than double over the next 12 months.

Carvana

It’s been a tough year for many stocks that were considered pandemic winners not too long ago. One of the most important is online car dealership Carvana.

With a decline in value of around 98 percent in 2022, the company is among the 10 worst performers in the Russell 3000. What sets it apart from the other nine is that it was by far the largest at the start of the year when its market value was around $39 billion Dollar.

Carvana had surged during the pandemic as consumers flocked to the digital platform to buy used cars. But falling prices, rising inflation and rising debt costs are calling the business model into question. The company has struggled to restructure debt and its bonds signal the market sees potentially high risk of default.

“Although the company has aggressively reduced fixed costs, we also view execution risks as elevated,” wrote Naved Khan, an analyst at Truist Securities, in a December note, downgrading the stock from “buy” to “hold.”

Peloton Interactive

Another lockdown winner turned loser is Peloton. After shedding much of its searing 2020 gains last year, the stock has plummeted another 78 percent in 2022 and is now trading well below its 2019 IPO price.

Peloton Interactive's survival is at stake.

Peloton Interactive’s survival is at stake.Credit:peloton

Peloton’s story has gone beyond reversing the once-booming demand for its exercise bikes and fitness classes as the company sought to shed jobs and relocate operations following calls from activist investor Blackwells Capital following the resignation of CEO and co-founder John Foley. Foley resigned as part of a leadership reshuffle.

“I think we’ll have an answer over the next year as to whether Peloton survives,” said Brian Nagel, an analyst at Oppenheimer & Co., who rates the stock as outperforming. “Time is not necessarily on their side.”

Most notably, analysts expect shares to rally in 2023, with the average price target implying upside potential of 59 percent over the next 12 months.

Confirm stocks

Peloton’s struggles have impacted Affirm, the lender Buy now, pay later (BNPL), whose revenues have been boosted by a partnership between the companies during the pandemic.

Affirm reduced its forecast for the fitness company’s gross merchandise value last month as it posted a loss and lowered sales targets. That caused the stock to fall further, which is down more than 90 percent this year.

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Having exploded during the pandemic, BNPL firms face growing challenges as rising interest rates and rising inflation begin to weigh on household incomes. They also face high capital costs and scrutiny of fees. Among payment peers, PayPal Holdings is down 64 percent this year, while Block (which owns Afterpay) is down 63 percent.

Piper Sandler analyst Kevin Barker, who has a neutral rating on Affirm, says more expensive capital and increasing competition in the space have weighed on the stock. “You’re just in a very competitive sector,” he said.

Goal

Retail giant Target posted its worst one-day decline since the 1987 Black Monday crash after it cut earnings forecasts in May, plunging 25 percent and giving back much of its pandemic profits.

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Since then, the stock hasn’t recovered and is now on course for its biggest annual decline since Bloomberg began keeping records in 1980, with an annualized decline of 37 percent.

Like most retailers, Target has felt the pain of bloated inventories and higher costs for goods, transportation, and labor at a time when consumers are restraining their spending. The company warned in November of a possible decline in comparable sales in the current quarter, the first decline in five years. It also forecast that operating income will shrink to about 3 percent of sales — about half of the previous forecast.

According to Citigroup analyst Paul Lejuez, near-term performance for Target “is likely to remain volatile.” Nevertheless, like many others, he has a buy recommendation for the share. According to data compiled by Bloomberg, none of the more than 35 analysts covering the retailer have a sell rating.

With support from Bre Bradham and Michael Msika.

https://www.smh.com.au/business/markets/facebook-coinbase-and-peloton-wipe-out-kings-of-2022-20221230-p5c9h3.html?ref=rss&utm_medium=rss&utm_source=rss_business Destroy the kings of 2022

Brian Lowry

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