Why stocks are plummeting this earnings season

Friday, another round of jaw-dropping stock sell-offs after earnings announcements hit the tape, when Roku (ROKU) stock plunged 23% and DraftKings (DKNG) cratered 22% — the second-worst one-day performance for both stocks. Nightmare earnings reactions have been a theme this quarter, as investors seize on concerns over slowing growth prospects for companies over a wide range of industries.

Combined with an increasingly hawkish Federal Reserve and a potential land war in Europe, investors are facing a perfect storm of headwinds. Yet earnings is still the engine for appreciation of the U.S. equity capital markets. Yahoo Finance crunched the numbers — peering into the S&P 500 components as well as the top Yahoo Finance trending tickers over the last year — to find the biggest one-day performance meltdowns after earnings announcements. There was no shortage of candidates.

Topping the list with the worst post-earnings performance is LendingClub (LC).The stock cratered 29% in one session in late January after they reported annual profit guidance that came up short of expectations. If we’re looking for themes, the threat of higher short-term interest rates are dampening growth prospects.

Plus LendingClub is a meme stock — which 1-800-Flowers.com (FLWS) is, too. But the go-to Valentine’s Day shoppe posted results recently that may speak to the wider supply chain and demand issues gripping consumer-facing industries. Benchmark maintained its Buy rating on the stock after releasing disappointing quarterly results, but the firm lowered its price target to $28 from $47 — opining that the company had “implied assumptions of no demand or supply chain improvements” throughout 2022.

In the consumer discretionary sector, along with 1-800-Flowers.com, we have LKQ Corp (LKQ), iRobot (IRBT), and Under Armour (UAA) in this list. Each is facing their own supply chain constraints and battles with inflation. But we find the most common post-earnings meltdown is in the communication services sector.

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Topping that list is Roku, which suffered the same fate as Meta…


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