2021 Nasdaq Winners: Semis, Hype, And Hope; 2020 Hangovers on the Losers Side

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2021 Nasdaq Winners: Semis, Hype, And Hope; 2020 Hangovers on the Losers Side
Credit: © Reuters.

by Daniel Shvartsman

Investing.com - While the major U.S. indices will end the year with over 20% gains across the board, marking the third consecutive strong year of U.S. market performance, underneath the surface there were some interesting trends. The Nasdaq 100 winners and losers for 2021 highlight the way some companies built on 2020's paradigm shift, while others snapped back to reality.

Nasdaq Winners: Hope, Software, Semiconductors, and a Giant

The top performer on the Nasdaq 100 in 2021 was Lucid Group (NASDAQ: LCID ), which gained nearly 300% on the year. The electric vehicle technology company typifies several of 2021's trends - SPACs, as it came public via Churchill Capital Corp IV, electric vehicle associated companies doing well, and retail enthusiasm for more speculative companies. The company has a $59B enterprise value and is, if not totally pre-revenue, at least pre-gross profit, showing investor enthusiasm for these sorts of companies. Rivian Automotive's IPO late in 2021 also highlighted this enthusiasm.

Moderna (NASDAQ: MRNA ) had a more obvious business model and track record to drive its success in 2021, as the vaccine maker became a household name for its first approved mRNA vaccine, which has been one of the key vaccines in the Covid-19 vaccination drive. The stock is poised to finish up 145% for the year.

Fortinet (NASDAQ: FTNT ) highlights the growth of software and cybersecurity specifically, and the company finished 144% higher this year after a 39% gain last year, an impressive acceleration. Datadog (NASDAQ: DDOG ) is a software as a service company selling monitoring software, and they also built on a boffo 2020 - up 160% last year - to gain another 82% in 2021, putting it 6th on this list.  Intuit (NASDAQ: INTU ) is an older line software company but continued to grow revenues in its small business lines, and is set to finish up 69% for the year.

The semiconductor value chain describes most of the remaining winners in the Nasdaq 100. NVIDIA (NASDAQ: NVDA ) ascended to be the most valuable semiconductor company in the world, as excitement around its graphic processing units dominance and the need for computing power pushed it 126% higher. Marvell Technology (NASDAQ: MRVL ) shares rose 85% on the back of a pair of data center and network solutions related acquisitions and continued growth. Applied Materials Inc (NASDAQ: AMAT ) and KLA-Tencor Corporation (NASDAQ: KLAC ) are both semiconductor equipment makers, meaning semiconductor companies trying to solve shortage issues ordered more of their equipment; AMAT was set to close up 83% for the year while KLAC came in 10th in this list with a 66% gain.

Alphabet (NASDAQ: GOOGL ) (NASDAQ: GOOG ) took 9th on this list, rising 66%, a formidable feat given that Alphabet is also the 3rd largest company in the U.S. market by market cap. 45% revenue growth at that scale, and with Google's profitability, is extraordinary, and so far anti-trust concerns have yet to really slow it down.

Nasdaq Losers: 2020 Winners hitting growth walls, China Stocks, and Self-Inflicted Damage

On the losers side of the ledger, we see a lot of names that would have been on the winner side a year ago.

Start with Peloton Interactive (NASDAQ: PTON ), the exercise equipment maker that sold a must-have product during a time of social distancing, but is faced with people wanting to return to gyms and an unclear outlook for how many people are left who haven't bought a Peloton bike or signed up for a subscription. Shares dropped 76% over the year, and the back half of the year especially felt like one stumble after another for the company.

Zoom Video Communications (NASDAQ: ZM ) had fewer visible stumbles - an aborted acquisition of Five9 (NASDAQ: FIVN ) was probably the closest thing - as they met guidance and showed prodigious profitability. But with the same questions over growth and who might be left to sign up for Zoom, and with Zoom fatigue as a cultural meme, it didn't matter, and shares dropped 45% on the year, the 3rd biggest drop on the year. DocuSign (NASDAQ: DOCU ) was somewhere in between these two companies, as another pandemic must-have that has struggled to find out what the new normal could be. DocuSign did have to lower guidance, like Peloton, but it is getting a little bit more of a benefit of the doubt in its valuation and performance, dropping only 31%.

Rounding out software companies who had tough 2021s is Splunk (NASDAQ: SPLK ), with a 32% drop, though in Splunk's case there was more self-inflicted or necessary pain as the company transitioned to a cloud-based model and said goodbye to its CEO. It may have struggled in competing with DataDog as well, a reminder of the increasing competition in SaaS.

China companies also struggled in 2021 amidst a bevy of new regulations, capital outflows, and concerns over whether investors will see returns on these companies in the current political environment. Pinduoduo (NASDAQ: PDD ) did the worst of the bunch on the Nasdaq, dropping 67%, while Baidu (NASDAQ: BIDU ) dropped 31%, and e-commerce retailer JD.com (NASDAQ: JD ) dropped "only" 20%.

Activision Blizzard (NASDAQ: ATVI ) struggled for a variety of reasons in 2021, many self-inflicted as the company had delays in releasing new game titles and had both senior management sexual misconduct allegations to address as well as allegations that management ignored the allegations. The gamemaker's shares dropped 28% on the year.

MercadoLibre (NASDAQ: MELI ) also falls in the bucket of 2020 winners who underwent some market (in)digestion in 2021, as the Latin American e-commerce retailer dropped 20%. PayPal (NASDAQ: PYPL ) may fall into this bucket as well, down 20% after more than doubling in 2020, though a number of fintech upstarts has pressured incumbents, and PayPal may be old enough to qualify as one.

Read also: Energy Leads S&P 500's 2021 Winners; Gambling, Gaming, and Payments Among Losers

See our full 2022 outlook series here.



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