CNBC’s Jim Cramer on Tuesday examined the worst-performing stocks in the Nasdaq 100 in 2021, reaching a mixed conclusion on their possible trading trajectories this year.
“There are a lot of names that should keep losing now that the Fed is your foe, but also some opportunities if you’re willing to be patient,” the “Mad Money” host said.
Cramer said so much went wrong for Peloton in 2021 that he’s surprised the stock didn’t fall even further than its 76% decline last year. “Now, tax loss selling here is horrific … so a bounce cannot be ruled out. But, in the end, exercise equipment has never been a great business, and it will be difficult for Peloton to compete as people start feeling safe enough to return to the gym,” Cramer said.
A trio of Chinese stocks
A security personnel stands guard at the opening session of Baidu’s annual AI developers conference Baidu Create 2019 in Beijing, China, July 3, 2019.
Jason Lee | Reuters
Pinduoduo, Baidu and JD.com were the second-, sixth- and eighth-worst performers in the Nasdaq 100 last year, respectively, Cramer said. He recommended investors stay away from this trio of stocks, as well as other Chinese firms, because of Beijing’s increasingly tough regulatory posture.
Cramer said he thinks investors shouldn’t completely give up on Zoom, even after a tough 2021, because the company has tremendous potential to grow as a player in the enterprise software category. “However, as long as Zoom tries to go it alone, its price to earnings multiple will keep shrinking,” Cramer said. “Currently it trades at roughly 40 times earnings, and I bet it can get even cheaper.”
Even after last year’s 32% decline, Cramer said he views Splunk’s stock as a sell until the company offers greater transparency into the departure of former CEO Doug Merritt, who stepped down in November.
The Docusign Inc. application for download in the Apple App Store on a smartphone arranged in Dobbs Ferry, New York, U.S., on Thursday, April 1, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images
“Like Zoom, DocuSign needs [to do] something to show that it’s taken advantage of its newfound size and reach. So far, it has not done so,” Cramer said. “This is not a niche company, but I fear it could end up being like fintech — destined to fall back to earth — and it still might have a long way to go.”
MercadoLibre, which is seen as “the eBay of Latin America,” is doing incredibly well from a business standpoint, Cramer said. However, he said valuation concerns were a major reason why the company’s stock fell about 20% in 2021.
“The stock sells at more than 400 times last year’s earnings, and nobody wants that kind of high-flier in this new environment where the Fed is no longer your friend,” Cramer said.
Cramer said he’s sticking with PayPal in his charitable investment trust, even though it was a rough 2021 and fintech stocks remain out of favor on Wall Street. “Be careful for now. This stock is one step forward and then one step back, as we’ve seen almost exactly in the last couple days,” he said.
Cramer acknowledged the competitive and capital intensive nature of the telecommunications industry. However, he said, “on this list, I think T-Mobile gives you the best chance of a bounce now that it’s arguably the best network in the nation.”
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