Which well-known companies are facing big problems in 2024 and what does that mean for investors?
The year 2024 was not a good one for some large companies. Intel, Lululemon and Etsy are among those that have experienced significant losses. These stocks have seen declines ranging from 35% to 60% since the beginning of the year. Such significant declines can be unsettling for investors, but they also open up opportunities for those who invest with a long-term perspective.
Let's take a look at the performance and future outlook of these three companies and assess whether now is the right time to invest in these stocks that have lost significant value.
Etsy $ETSY: Fighting the challenges of consumer spending
Shares of Etsy, a popular online marketplace for unique and handmade products, are down more than 35% in 2024. This decline is primarily driven by broader economic challenges, including rising inflation that has reduced consumers' willingness to spend on unnecessary goods. Gross merchandise volume (GMS), which measures platform activity, fell 2.1% year-on-year in the second quarter of 2024, although there was a slight improvement from the first quarter, suggesting signs of recovery.
Etsy's exclusion from the S&P 500 is another sign of the difficulties the company is facing. Although Etsy is working to improve products and strengthen marketing, it continues to struggle with fluctuating consumer spending, particularly in the area of surplus goods. Management has warned that difficult economic conditions are likely to persist and expects GMS to continue to decline in the third quarter.
Despite some stability in buyer engagement, the long-term outlook remains uncertain due to competition and macroeconomic pressures. Analysts are cautious and rate Etsy stock a "hold." However, the average target price of $66.61 suggests potential upside.
Lululemon $LULU: Innovation on the horizon despite a tough year
Lululemon, the luxury sportswear brand, saw its stock decline by about 51% in 2024. Weaker performance in the U.S. market, product issues and a more cautious outlook for sales contributed to the decline. However, the company is working to overcome these challenges through innovation and improved offerings.
Lululemon is introducing new sportswear collections, including shorts, T-shirts and tracksuits, which should attract new customers. Store performance remains strong, and the company believes this trend will continue in the second half of the year. Although uncertainty around the shopping season and the US election may temporarily dampen results, the outlook for 2025 and beyond is more optimistic.
Lululemon has an ambitious plan to double revenues to $12.5 billion by 2026. The company's success will depend on its ability to renew its product mix and continue to gain market share, particularly in international markets. Analysts rate the stock cautiously positive with an average target price of $318.57, representing potential upside.
Intel $INTC: Fighting giants in a competitive field
Intel is one of the worst-performing large-cap stocks in 2024, having lost a whopping 60% of its value. The company faces intense competition and is losing market share, especially with the growth of artificial intelligence (AI), where Intel lags well behind its rivals.
Intel itself has admitted that the outlook for the second half of 2024 remains difficult, especially in terms of margins and competitiveness. The company has introduced cost-saving measures that could help stabilize its financial situation in the short term, but the question remains whether this will be enough to restore growth.
Although a significant drop in the stock may present a buying opportunity, Intel's future remains uncertain. Analysts rate Intel stock a "hold" with an average target price of $29.19, suggesting potential upside. However, investors should consider the long-term challenges Intel faces in the highly competitive semiconductor market.
Conclusion: is it time to buy?
For investors with a long-term view, the significant losses in Intel, Lululemon and Etsy stock may be an interesting buying opportunity. However, each of these companies face specific challenges and their near-term outlook remains uncertain. While Etsy is struggling with consumer spending, Lululemon is facing competition and Intel is lagging in innovation. Investors should carefully consider these factors and the potential growth opportunities of these companies before making an investment decision.
Disclaimer: There is a lot of inspiration to be found on Bulios, but stock selection and portfolio construction is up to you, so always conduct thorough self-analysis.
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