In this article, we discuss 5 stocks that the strong dollar is crushing. If you want to see more stocks in this selection, check out Strong Dollar is Crushing These 10 Stocks.
5. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 109
Netflix, Inc. (NASDAQ:NFLX) reported its Q2 2022 results on July 19, posting GAAP earnings per share of $3.20, beating market consensus estimates by $0.26. The revenue of $7.97 billion jumped 8.6% year over year, but missed Wall Street estimates by $60 million. The company lost almost 1 million paid subscribers in Q2, compared to the 2 million guidance. In its Q3 2022 outlook, Netflix, Inc. (NASDAQ:NFLX) expects a revenue of $7.84 billion compared to an $8.10 billion consensus, and an EPS of $2.14 versus a market estimate of $2.76. Netflix CFO Spencer Neumann on July 20 informed investors that a strong dollar resulted in their Q2 revenue growth coming in below the 9.7% forecast.
On July 20, Wells Fargo analyst Steven Cahall observed that Netflix, Inc. (NASDAQ:NFLX) has reached a bottom, assuming subscriber growth does not meet any new lows. In 2023, latest initiatives will start to contribute, and it is rational to expect that Netflix, Inc. (NASDAQ:NFLX) in 2024 and beyond will have very strong top and bottom-line growth, in addition to improved free cash flow. The analyst maintained an Equal Weight rating and a price target of $300 on the shares.
According to Insider Monkey’s data, Netflix, Inc. (NASDAQ:NFLX) was part of 109 hedge fund portfolios at the end of Q1 2022, compared to 113 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 6.35 million shares worth $2.3 billion.
Here is what Oakmark Fund has to say about Netflix, Inc. (NASDAQ:NFLX) in its Q2 2022 investor letter:
“Netflix‘s stock price was down considerably after providing a weaker than expected outlook for both subscriber growth and profit margins. After meeting with management and scrutinizing our investment thesis, we lowered our estimate of business value to account for the company’s softer near-term guidance. However, we believe the decline in the company’s share price more than adjusts for this. Indeed, Netflix now trades for a discount to the S&P 500 Index on next year’s GAAP earnings despite our view that the company remains a much better than average business run by a highly accomplished management team. We believe the company’s lead in streaming remains intact and we expect terminal operating margins to be substantially higher than they are today. Furthermore, we are encouraged by Netflix’s potential to enhance revenue growth through advertising, the monetization of password sharing and further penetrating international markets.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) missed Wall Street estimates on Q2 2022 earnings, and the company warned investors in its latest earnings call on July 26 about the difficult macro backdrop, consisting of increasing currency challenges from the strong dollar and ad spending slowdown in the future. A strong dollar marked a 3.7% negative impact in Q2, with a higher effect on operating income than revenues. Alphabet Inc. (NASDAQ:GOOG) expects an even greater foreign exchange impact from the strengthened dollar ahead.
Susquehanna analyst Shyam Patil on July 27 lowered the price target on Alphabet Inc. (NASDAQ:GOOG) to $150 from $187 and reiterated a Positive rating on the shares. The analyst said Q2 results were better than feared, though management did point towards difficult 2H comps, macro uncertainty, and forex headwinds. The analyst said while Alphabet Inc. (NASDAQ:GOOG) will not be immune from macro turbulence, he continues to see Search as one of the most resilient categories of online spend and believes it will offer strong support for the overall business.
Among the hedge funds tracked by Insider Monkey, Chris Hohn’s TCI Fund Management is a significant stakeholder of Alphabet Inc. (NASDAQ:GOOG), with 2.37 million shares worth $6.62 billion. Overall, 160 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG) at the end of Q1 2022, up from 158 funds a quarter ago.
Here is what Wedgewood Partners has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q2 2022 investor letter:
“Alphabet grew its core search revenues +24% on a +30% year-ago comparison. Despite this stellar top-line performance, shares sold off as the market began to discount fears of a recession. However, the stock has outperformed relative to other holdings as core Google Search has been less affected by disruptions related to Apple’s privacy initiatives. Alphabet’s Cloud segment is generating revenue at a $24 billion run rate but is still running at a loss. We think this business can generate much better margins at some point. In the meantime, the Company has 4% to 5% of shares authorized for repurchase which is an attractive use of capital as the stock trades for about just 18X 2023 consensus estimates.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 200
Meta Platforms, Inc. (NASDAQ:META) shares traded 3% lower on July 27 after the Q2 2022 results missed Wall Street consensus and Q3 guidance fell short of analysts’ expectations. The company expects Q3 revenues ranging between $26 billion to $28.5 billion, versus Wall Street’s forecast of $30.38 billion. Meta Platforms, Inc. (NASDAQ:META) said that the weak Q3 guidance factors in soft advertising demand, and foreign currency headwinds will result in a 6% headwind to revenues in Q3.
On July 28, RBC Capital analyst Brad Erickson lowered the price target on Meta Platforms, Inc. (NASDAQ:META) to $190 from $200 and assigned an Outperform rating to the shares. The company’s Q2 results were “roughly in-line” with his estimates but its Q3 guidance was 10% below market consensus, the analyst told investors. Reels must boost monetization and curb Tik Tok market share loss, target audience must improve, and investors must “find religion” on Metaverse investments before the stock moves out of its present valuation range, the analyst added.
According to Insider Monkey’s Q1 data, 200 hedge funds were bullish on Meta Platforms, Inc. (NASDAQ:META), down from 224 funds in the last quarter. Boykin Curry’s Eagle Capital Management is a notable position holder in the company, with 7.4 million shares worth $1.65 billion.
Here is what Boyar Value Group has to say about Meta Platforms, Inc. (NASDAQ:META) in its Q4 2021 investor letter:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms Inc. (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Microsoft Corporation (NASDAQ:MSFT) reported on July 26 its FQ4 results, announcing earnings per share of $2.23 on a $51.9 billion revenue, gaining 12% year-over-year, which is the slowest growth in two years. Microsoft Corporation (NASDAQ:MSFT) said Q2 results were affected by $595 million worth of foreign exchange headwinds, more than its expectations last month, when the company said it was prepared for a $460 million forex impact. Additionally, Windows revenue was hit by $300 million on the back of China’s COVID shutdown earlier this year.
On July 27, Wedbush analyst Daniel Ives lowered the price target on Microsoft Corporation (NASDAQ:MSFT) to $320 from $340 and kept an Outperform rating on the shares after the FQ4 results. While the earnings and revenue missed the Street estimates, the underlying primary metrics around cloud and commercial bookings were robust and will be in focus once investors come to terms with headline numbers, the analyst contended.
According to Insider Monkey’s data, Microsoft Corporation (NASDAQ:MSFT) was part of 259 public hedge fund portfolios at the end of Q1 2022, compared to 262 funds in the last quarter. Terry Smith’s Fundsmith LLP is a notable stakeholder of the company, with a position worth $3 billion.
Here is what Carillon Clarivest Capital Appreciation Fund has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Microsoft (NASDAQ:MSFT) reported positive results driven by personal computing strength, but analysts were especially positive on its growth outlook for its Azure cloud-computing services.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) on July 28 posted its June quarter results. While the company recorded a loss per share of $0.20, its quarterly revenue climbed 7.21% year over year to $121.23 billion, outperforming Street consensus by $2.09 billion. In its Q3 2022 guidance, Amazon.com, Inc. (NASDAQ:AMZN) expects net sales to lie between $125.0 billion and $130.0 billion, compared to a $126.58 billion consensus. This guidance factors in a negative impact of approximately 390 basis points from foreign exchange rates.
On July 29, UBS analyst Lloyd Walmsley raised the price target on Amazon.com, Inc. (NASDAQ:AMZN) to $180 from $167 and reiterated a Buy rating on the shares. The company announced solid Q2 results with “robust” backlog growth, and its Q3 revenue growth outlook of 13%-17% also exceeded expectations, the analyst told investors. He adds that Amazon.com, Inc. (NASDAQ:AMZN)’s fulfillment expense and COGS were both below his forecasts, though these were partly offset by increased marketing costs.
According to Insider Monkey’s data, 271 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN) at the end of Q1 2022, compared to 279 funds in the previous quarter. Fisher Asset Management held a significant stake in the company, comprising 2.3 million shares worth $7.70 billion.
Here is what Oakmark Select Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2022 investor letter:
“Amazon (NASDAQ:AMZN) is the leading e-commerce and cloud-computing provider in the world. Two-thirds of U.S. households are Amazon Prime subscribers, and over half of all online product searches now start on Amazon. We believe the company’s strong customer loyalty and massive infrastructure are significant barriers to entry in a growing e-commerce market. Separately, Amazon Web Services (“AWS”) controls nearly half of the market in cloud computing. We believe AWS has become utility-like in nature and scale and we expect healthy growth moving forward as IT workloads continue moving to the cloud. More recently, concerns about rising investment spending have weighed on the stock-as they have in times past-providing us another opportunity to purchase shares at a very attractive price. At our purchase price and valuing AWS like its peers, an investor isn’t paying much of anything for the immensely valuable e-commerce franchise.”
You can also take a look at This Analyst Is Bearish on These 15 Retail Stocks Amid “Soft Landing” Expectations and 10 Crypto Companies Hit By the Recent Crash.
