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CE100™ Index: As Q2 Dawns, Platforms Plunge While Healthcare Shows Faint Pulse

Platform stocks, plunging double digits.

The Move pillar moving … well, down.

In fact, for PYMNTS’ Connected Economy (CE100™) Index, perhaps the only safe haven, at least recently, has been health care — at least as measured a week into the new quarter.

And we haven’t even started earnings season yet.

But if stocks move in anticipation of what’s to come — in the broader economy, of course, and company-specific events — then, as Bette Davis once said: Fasten your seatbelts.

Inflation and Other Worries

Inflation has been playing havoc with the markets in general, but has also been pointing to headwinds at consumer spending.

The dreaded term “recession” has been making rounds in the headlines, which may be giving investors pause: The disruptors that have gotten a running start in payments, in online commerce, and in leisure have been launched, largely, in the years after the Financial Crisis. This  means they’ve been relatively untested by a recession. The last one — the one during the pandemic — actually benefitted many of the CE100™ names, with the tailwinds underpinning digital commerce.

There are at least some caution signs flashing on the Street, which in turn are hitting some of the pillar-by-pillar performances that, taken as a whole, make up the CE100™.

Getting Ready for the Earnings Deluge

Initiations on some of the names, from brokerages, have been less than enthusiastic, right as earnings season gets ready to ramp in the coming weeks.

As PYMNTS reported last week, sell-side firm MoffettNathanson said “longer-term growth trajectories are likely to disappoint” at companies including Affirm, which it gave a “neutral” rating and a $50 target (the stock closed the week at $37.58).

MoffettNathanson’s concerns come just a few weeks after Affirm raised its outlook last month, from guidance it had initially given in February.

Vroom continued to sink in the wake of its fourth quarter results released early last month and in the wake of reporting this past week by,  in Indiana several customers said they’d bought vehicles from sites including Vroom but did not get title, registration or license plates over the span of several months.

DraftKing’s announced expansion plans last week weren’t enough to spur gains in the stock. The company and the Mashantucket Pequot Tribal Nation announced that they would expand their relationship — where the joint efforts would include a DraftKings Sportsbook both online and a retail setting at the tribe’s Foxwoods El San Juan Casino in Puerto Rico.

As per the release, in addition to online and retail sports betting, DraftKings will have the opportunity, “pending receipt of applicable licenses and regulatory approvals,” to provide customers in Puerto Rico with its legacy daily fantasy sports product. That product, the companies said, is currently available in 44 states in the United States and operational in six countries internationally.

The Overall Performance

The Connected Economy 100 Index (CE100™) slipped 4.5% in the first full week of the current quarter, outpacing the declines seen in other, broader measures — the  Nasdaq fell 3.5%, for example. So far for the year, the CE100™ Index is down more than 18%.

 CE100 Performance vs. Broader Indices

Source: PYMNTS

And yet, that’s painting the CE100™ with a broad brush. In fact, there were some positive returns — scant though they were. The Be Well (+0.1%) Index eked out a slight gain, up 10 basis points. The best performances, in trailing order, included the Communications Index, off 3.4%, followed by the banking index, down 3.7%. The worst-performing subset came with the Move Index, which lost 7.1% in the week.

The “movement” names — the companies that get goods hither and yon, whether food deliveries, people or other types of freight — most markedly to the downside were firms like XPO (off more than 12% on the week) and Uber (down more than 10%). Uber, we note, also belongs in the platform economy.  The push toward super-app territory continues unabated, as recent reports show.

In the U.K. the company is adding options to book flights, train tickets, hotel rooms and car rentals. It may be the case, we’d hazard to guess, that investors may be weighing the impact on near term operating results on those expansionary efforts.

Read also: Uber Adds Booking for Flights, Trains, Hotels

Healthcare Gains Ground

Gains were to be found — just barely.  The Be Well segment eked out a 10 basis-point rally for the week. Driving the slight gains in the Be Well segment, we see that double-digit percentage gains in several marquee stocks within healthcare helped boost the sector’s performance. The top three performing stocks of the last week were United Healthcare (+6.6%), McKesson (+6.2%) and AetnaCVS (+5.6%).

In company-specific news, UnitedHealth and Change Healthcare extended the closing date of their merger by another nine months to Dec. 31.

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