Cruise Stocks Are S&P 500’s Worst Q2 Performers. Netflix Also Falls Sharply.
The stock market close Thursday will wrap up the second quarter of 2022 —and what a quarter it has been.
A lot has happened between April and June. Notably, markets have been thrown into disarray as the Federal Reserve — in its battle to cool rising inflation — raised interest rates by the most since 1994, fueling fears that its aggressive policy could lead to a recession.
Investors have shied away from stocks in response to the volatility. The
has fallen more than 17% since the start of the second quarter on April 1. And with rising recession fears have come concerns over the health of the consumer —causing stocks that rely on discretionary spending to take a hit, such as those in the travel and entertainment industries.
These are the top five stocks that have weighed heaviest on the broad market index:
- Royal Caribbean
) have fallen 57% this quarter as of Wednesday’s close. The company has struggled to turn profitable since March 2020, when it was prevented during the pandemic from operating out of U.S. ports for about 15 months. Since then, management has signaled that the company “continues to make progress towards profitability,” but investors just aren’t convinced.
It doesn’t help that fears of an economic slowdown have heightened concerns that consumers may be curbing discretionary spending, which would negatively impact cruise bookings and revenue.
Royal Caribbean’s cruise competitor
) also hasn’t had it easy this quarter. The stock was down 56% as of Wednesday’s close, and was poised to fall further on Thursday. On Wednesday, Morgan Stanley updated its worst-case scenario for the stock, saying shares could fall to as low as $0 if a recession triggers another demand shock.
Carnival, like Royal Caribbean, has said it was “making strong progress” in restarting its fleet around the globe.
has been battered over the course of the year, losing over two-thirds of its value. Over the second quarter, Netflix has lost 52%, with the stock plummeting since the company reported disappointing earnings and lagging subscriber growth in the March quarter. Goldman Sachs and Benchmark recently downgraded the stock to Sell from Neutral, with Goldman citing concerns over churn in the case of a recession, as well as heightened competition.
In a bid to turn things around, Netflix has said it is was exploring ways to add a lower-cost, ad-based subscription model. The announcement has yet to excite investors, however. The shares were losing 3.8% on Thursday.
) management team has said that the company sees a “robust” summer recovery — but don’t tell that to investors. Expedia shares have dropped 51% this quarter, and were falling 4.7% on Thursday.
BTIG analyst Jake Fuller noted that macroeconomic factors could stunt the travel sector’s fledgling recovery. Traffic to online booking agents slowed in June, Fuller said, which could be a “potential early warning sign that travel isn’t immune from the mounting macro pressure.
Many analysts still believe the stock is worth owning, with Piper Sandler reiterating its Overweight rating on Wednesday and arguing that the return of business travel could give the stock a much-needed boost.
5. Caesars Entertainment
) stock has fallen 48% this quarter. Casino operators have not been shielded from the vicissitudes of overall travel trends, which have negatively impacted the stock as investors fret about how discretionary spending will hold up in case of a recession.
Still, for Barclays analyst Brandt Montour, Caesars is still a buy. The analyst argued that regional casinos did a good job of combining durable and growing cash flows with compelling valuations.
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