When “Story Stocks” Crash Like this, the Market is Kaput
When Story Stocks Crash Like this, the Market is Kaput
by Wolf Richter January 14, 2016
[font color="blue"]Reality suddenly mucks up the rosy scenario.[/font]
Many of our heroic story stocks are getting totally destroyed. Yet not much has changed: Their business model, if any, is the same; theyre still losing money hand over fist; and theyre still trotting out the same custom-designed metrics that seduced analysts and the media once upon a time. But its not working anymore.
After the drubbing on Wednesday the Nasdaq plunged 3.4% and is down 13.5% from its high we know one thing for sure: there will be a rally someday that lasts longer than a few hours. But something big has changed.
There was the old guard of new tech. Netflix plummeted 8.6% on Wednesday and is down about 20% from its 52-week high. Apple dropped 2.6% and is down 28% from its 52-week high. Facebook lost 3.9% and is 14% off its 52-week high. The list goes on.
But the real drubbing was reserved for the new darlings, the fruits of the recent IPO boom, and other story stocks:
Etsy dropped 4.9% for the day to a new low of $6.99. After its IPO at $16 in April last year, it spiked to $35.74 and has gotten whacked down 80% since. Twitter plunged 4.8% to a new low of $18.68. After its IPO at $26, it spiked to $78, from which it has now plunged 76%. Shopify plunged 10% during the day and is down 48% from its high in June. ................(more)
http://wolfstreet.com/2016/01/14/when-story-stocks-crash-like-this-the-market-is-kaput/