Peloton fell below its IPO price, Netflix suffered its steepest drop in a decade, and chip stocks continued to struggle. Add it all up and the Nasdaq just closed out its worst week since the beginning of the pandemic.

At Friday’s close, the Nasdaq was down 7.6% for the week, its biggest decline since March 2020, when global markets sank on Covid-19 concerns. It’s also the fourth straight weekly drop for the tech-heavy index, the longest losing streak since a similar stretch last April and May.

Heading into 2022, the story for tech stocks was outward rotation. Inflationary pressure was leading the Federal Reserve to signal that interest rate hikes were coming. Shares of cloud-computing companies and other high-multiple stocks that outperformed the market in recent years were plunging as the work-from-home theme fell apart.

Business fundamentals still appeared to be solid, though, and the economy was on the upswing.

That confidence waned this week, as terrible news in pockets of the technology sector raised concerns with the wave of Q4 tech earnings reports set to kick off in the coming days.

Peloton on Thursday reported preliminary quarterly results and said the number of connected fitness subscribers will fall short of expectations. The company put out its release after CNBC reported that Peloton is temporarily halting production of its connected bikes and treadmills and looking for ways to control costs.

“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” Peloton Chief Executive Officer John Foley said in a statement. 

Peloton shares plummeted 24% on Thursday, before a partial rebound on Friday left them down 14% for the week. The stock closed at $27.06, below its $29 IPO price from 2019.

Peloton is a niche company with a product that saw high demand during the early days of the pandemic, when consumers were stuck at home and gyms were closed.

But what might have been dismissed as a one-off gained significance after hours on Thursday, when a much bigger company, Netflix, shocked the market.

The video-streaming company said it expects to add 2.5 million subscribers during the first quarter of 2022, far below analysts’ estimates of 6.93 million, according to StreetAccount. The stock fell 22% on Friday, the steepest drop in almost a decade, and slid 24% for the week.

Investors followed by selling out of streaming audio service Spotify, which dropped 11% for the week, and gaming company Roblox, which declined 13%. Meanwhile, Amazon had its worst week since 2018, dropping 12%.

Trading apps Robinhood and Coinbase had a rough week as well, falling 14% and 17%, respectively, amid a market slide in speculative assets, including cryptocurrencies.

Tech earnings season gets started in a big way next week, with IBM reporting on Monday, followed by Microsoft on Tuesday and Intel Wednesday.

Of the three, Intel suffered the largest drop this week, falling 6.6%. That was part of a broader decline in semiconductor companies, as AMD, Qualcomm and Nvidia each dropped more than 12%.

Supply chain constraints remain a problem, and investors may be expecting some troubling forecasts on device sales as earnings trickle out. Researcher IDC said last month that the PC market will likely slow this year following two years of double-digit growth.

In a report on Thursday, analysts at Piper Sandler downgraded AMD to the equivalent of a hold from buy, based in part on the trajectory of computer sales. AMD is scheduled to report fourth-quarter results on Feb. 1.

“We do not see the company missing estimates over the next two quarters, but ultimately, we do see a combination of slower growth and a slowing PC environment burdening the stock,” Piper Sandler wrote.

For the year, the Nasdaq is down 12%, losing to the S&P 500, which has dropped 7.7%, and the Dow Jones Industrial Average, which has fallen 5.7%. In 2021, the Nasdaq lagged the S&P for the first time since 2016.

The S&P hasn’t beaten the Nasdaq in two consecutive years since 2006 (when it finished a three-year run ahead of the Nasdaq). While it’s still very early to make a call on how 2022 will wind up, tech is off to an ominous start and investors enter earnings season very on the edge of their seats.

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