It may be hard to believe, given the massive downturn the markets took on Friday, but there were some positive performers in the CE100™ Index.
A couple of firms even managed to log gains for the week, but not enough to help the overall Index break its seemingly unshakeable downturn. Taken as a whole, the CE100™ Index slid by 3.4%, almost pacing the 3.7% decline in the NASDAQ, with all pillars declining.
Earnings, of course, rule the day, at least for now — and amid the carnage, you’d be hard pressed to find some names that finished with positive returns for the week, but they were there. For example, Meta gained 9% and LendingClub was up 14.8%.
Relief rallies, you might call them. Although the two companies operate in different spheres, they do, of course, strive to improve and change the very nature of connectivity.
Changing Business Models
These particular firms are also changing their own business models: Meta is busy refashioning the (virtual) ways in which social interactions and commerce and media connect, and LendingClub is busy creating a digital bank. In doing so, it seems that investors were willing to reward the prospect of new revenue streams being realized in the here and now — and what might lie ahead.
As relayed in this space, Facebook parent Meta Platforms is doubling down on short-form video and artificial intelligence (AI) performance in social media feeds. CEO Mark Zuckerberg acknowledged that Meta’s “transition to short-form video … doesn’t monetize as well for now,” but added, “We’re quite optimistic about [monetization] over the long term.”
Read more: Meta to Launch Horizon Metaverse in 2022
As for LendingClub — which has broadened its platform with its Radius Bancorp buy — results showed significant growth in deposits, in loan originations and in activity across its core marketplace.
In supplemental materials that accompanied its earnings, LendingClub said that it had passed the 4 million member mark. New loan originations came in at $3.2 billion, up 5% from the most recent quarter, while deposits soared by 68% to $4 billion.
See also: LendingClub Deposits Grow 68% in Wake of Radius Bancorp Acquisition
But due in part to the fact that the names in the Index are equal-weighted, these rallies found headwinds in the declines of companies such as Teladoc, which slid 42% on the week. In its own earnings report, Teladoc said it provided 4.5 million visits through its network of clinicians, a 35% gain, with mental health utilization now a driving force for the company. However, yield on marketing spend has been trending lower, and competition has been heating up.
CEO Jason Gorevic said on an earnings call that Teladoc’s BetterHelp mental health service was impacted by those lower yields, adding, “We believe the biggest driver of this dynamic is smaller private competitors pursuing what we think are low- or no-return customer acquisition strategies in an attempt to establish market share.”
Related: Teladoc Says Overcrowded Telehealth Field Is Slowing Growth for Fittest Players
Even the 800 lb. gorillas of the connected economy are not immune to investors’ willingness to shoot first and ask questions later, at least in the wake of earnings reports — and where there’s evidence of a slowdown. Amazon’s shares were down about 15% on the week, as top line growth slowed to 7% from 44% growth a year ago — and product sales were down, which indicates that eCommerce may be losing at least some of its pandemic steam.
As a new week and a new month dawns, April’s showers of losses remind us that the CE100™’s promise of disrupting the ways in which we work, live, bank and travel offers no guarantee that investors will be happy with the results.
CE100 Relative Performance
Source: PYMNTS
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