What are the stock market’s most notorious “cult stocks,” and how do we identify them? While most investors consider “cult” to be a dirty four-letter word, the corporations that comprise this category have performed incredibly well over the past years. Whereas previously beloved companies like Yelp and Twitter (TWTR) have fallen 44.1% and 21.1% over the last two years, cult stocks like Ambarella (AMBA), Netflix (NFLX), Tesla (TSLA), Chipotle (CMG), and Amazon (AMZN) have experienced near triple-digit gains.
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Original Content Is King
Everyone has access to a Netflix (NFLX) account. Whether you're piggybacking off your parents (who wouldn't?), grandpa (guilty), or even, perhaps (sadly), your ex-girlfriend, every human has unfettered access to an account. There's no denying it: everyone loves Netflix. Don't believe us? Just reference Google's (GOOGL) traffic results and you'll realize that, during peak Internet times, Netflix accounts for 37% of bandwidth usage.
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Netflix Is On Fire
Wall Street's favorite momentum stock, Netflix (NFLX), has been on an unprecedented upward tear. The company’s share price recently broke its all-time high, peaking at $704 as of yesterday's close. Over the past week, shares of Netflix settled around $675, having more than doubled since its 52-week low of $315.54; Netflix is also well above its 50-day moving average of $617.96.
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Orca's Sink SeaWorld
SeaWorld Entertainment Inc. (SEAS) is facing a whale (technically, an orca) of a problem. Since the 2013 release of the documentary “Blackfish,” which targeted SeaWorld theme parks, claiming that undersized orca enclosures promoted aggressive behavior (which led to the deaths of many trainers), the company’s stock has literally been sinking.
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Is Blackberry Back?
In the span of about five years, BlackBerry (BBRY) rose to the peak of the US mobile phone market and then crashed to the bottom. Before 2011, BlackBerry held a larger percentage of the global market share for mobile phones than both Apple (AAPL) and Google (GOOG). In fact, for FY 2009, BlackBerry held 50% of the global market share for smartphones.
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Momentum Investing
Technology stocks, once the darlings of Wall Street, are now facing intense investor scrutiny. Over the last three months, key tech stocks, such as Twitter (TWTR), Netflix (NFLX), and Amazon (AMZN), experienced significant declines in their stock prices. Twitter is down more than 44%, Netflix is down nearly 20%, and Amazon is down about 17% (all since March).
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Beating The Odds
In my previous article, Getting Back To Basics, I explained why long-term investing is a viable strategy for new investors and provided numerous examples of basic investment fundamentals. This week, I aim to build upon those fundamentals by introducing two more investment concepts, diversification and index investing, while also describing how exchange traded funds (ETFs) help investors mitigate risk.
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