CE100™ Index: Platforms Plunge, Healthcare Holds Up
Platform stocks, plunging into double digits.
The Move pillar moves… well, down.
In fact, for PYMNTS’ Connected Economy Index (CE100™), perhaps the only safe haven, at least recently, has been healthcare – at least as measured a week into the new quarter.
And we haven’t even started earnings season yet.
But if stocks are moving in anticipation of what’s to come – in the broader economy, of course, and company-specific events – then, as Bette Davis said: Fasten your seat belts.
Inflation and other worries
Inflation wreaked havoc on markets in general, but also put its finger on consumer spending.
The dreaded term “recession” is making headlines, which may give investors pause: Disruptors who got off to a good start in payments, e-commerce and entertainment were launched, largely, in the years following the financial crisis. This means that they have been relatively untested by a recession. The latest – the one during the pandemic – actually benefited many CE100™ names, with the tailwinds that underpin digital commerce.
There are at least a few warning signs flashing down the street, which in turn knocks out some of the pillar-by-pillar performance that, taken together, makes up the CE100™.
Preparing for the income deluge
Initiations on some of the names, brokerages, have been less than enthusiastic, just as the earnings season is set to pick up speed in the coming weeks.
As PYMNTS reported last week, sales firm MoffettNathanson said “longer-term growth trajectories are likely to disappoint” at companies like Affirm, which it gave a “neutral” rating and an objective. $50 (the stock closed the week at $37.58).
MoffettNathanson’s concerns come just weeks after Affirm raised its outlook last month from guidance it originally gave in February.
Vroom continued to sink following its fourth quarter results released early last month and following reports last week by CBS4.com, in Indiana several customers said they had purchased vehicles on sites such as Vroom but had not obtained titles, license plates or registrations over a period of months.
Expansion plans announced by DraftKing last week weren’t enough to boost the title’s gains. The company and the Mashantucket Pequot Tribal Nation announced they would expand their relationship – where joint efforts would include a DraftKings Sportsbook both online and a retail framework at the tribe’s Foxwoods El San Juan casino in Puerto Rico.
According to the release, in addition to online and retail sports betting, DraftKings will have the ability, “pending receipt of applicable licenses and regulatory approvals,” to provide customers in Puerto Rico with its former daily fantasy sports product. This product, the companies said, is currently available in 44 states in the United States and operational in six countries internationally.
The Connected Economy 100 Index (CE100™) fell 4.5% in the first full week of the current quarter, outpacing declines seen in other broader metrics – the Nasdaq fell 3.5% , for example. Since the beginning of the year, the CE100™ index is down more than 18%.
CE100 performance compared to broader indexes
And yet, it’s painting the CE100™ with a wide brush. In fact, there have been some positive feedbacks – rare as they are. The Be Well index (+0.1%) made a slight gain, up 10 basis points. Top performers, in working order, include the communications index, down 3.4%, followed by the banking index, down 3.7%. The worst performing subset came with the Move Index, which lost 7.1% over the week.
The names of the “movement” – companies that move goods here and there, whether delivering food, people or other types of freight – most noticeably down were companies like XPO ( down more than 12% over the week) and Uber (down more than 10%). Uber, it should be noted, also belongs to the platform economy. The push into super-app territory continues unabated, as recent reports show.
In the UK, the company is adding options to book flights, train tickets, hotel rooms and car rentals. Investors may be evaluating the impact on short-term operating results of these expansion efforts.
Read also: Uber adds booking for flights, trains and hotels
Health gains ground
Gains had to be found – barely. The Be Well segment rallied 10 basis points for the week. Behind the slight gains in the Be Well segment, we see that double-digit percentage gains in several leading healthcare stocks helped boost the sector’s performance. The three best performing stocks last week were United Healthcare (+6.6%), McKesson (+6.2%) and AetnaCVS (+5.6%).
In company-specific news, UnitedHealth and Change Healthcare have extended the closing date of their merger an additional nine months to December 31.