It has been a painful week for investors as the stock market has taken back nearly all of the growth that we saw in 2020, in just a few trading sessions. Don’t panic! These things happen. If the stock market just kept going up every day, we would all be multi millionaires now. This is where the true diamond hands come in to play! Often these corrections provide investors with incredible opportunities to buy stocks at discounted prices. Nothing has fundamentally changed about these companies, but market sentiment is an extremely powerful thing. Let’s take a look at three stocks that have fallen more than they should have.
Shopify ($1102.91|3.62%): All Shopify has done recently is crush earnings expectations by having a near $1 billion revenue quarter. But as with most tech stocks this past week, Shopify is being punished for going too high too fast. With the announcement of Johnson & Johnson’s (NYSE:JNJ) recent COVID-19 vaccine, as well as President Biden’s expectation that most adults in the United States will be vaccinated by the end of March, investors are overreacting to the reopening sector, and acting irrationally towards solid growth companies. Shopfiy is one of these victims. It didn’t help that CEO Tobias Lutke was cautious about providing 2021 guidance, warning that the same sort of growth that was seen during the pandemic should not be expected if the economy is reopened. Still, Shopify is the industry leader and its rapid ascension is wholly justified. Load up on this stock is nearly 25% off of its 52-week highs from only a month ago.
Square ($133.29|-2.67%): CEO Jack Dorsey may have gotten ahead of himself by announcing its investment in Bitcoin, as the price has now been somewhat tied to the volatility of the cryptocurrency. Furthermore, Square also announced it had purchased Tidal from majority owner Jay-Z, for $297 million. Investors were unsure of how this fits into Square’s ecosystem, and thus shares were down on the news. Square also recently announced that it is launching an in-house bank and received a full banking charter from the FDIC. This allows Square to provide so many more services to its clients, and gives it a sort of one-up move on industry rival PayPal ($178.42|-1.43%). Square has positioned itself to become a financial powerhouse in the United States, and already has plans for global expansion, something PayPal already has.
NIO ($30.95|1.54%): It would have been easy to put Tesla ($1049.61|1.75%) in this article, but NIO has had a rougher week following its less than optimal quarterly earnings report. But it was more of a perfect storm of things that caused Nio’s stock to tank, including a surprise profit from rival Li Auto ($31.13|1.17%), as well as a slowdown in vehicle deliveries from January to February. Throw in an electric vehicle selloff and a broader market correction, and investors who managed to make a profit off of NIO in 2020, are taking that and heading for cover. Keep an eye on NIO’s price as it is heading towards value levels, especially as the company begins its expansion into Europe later this year.
Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.