5 Popular Stocks That Tanked in 2023 - Is it Time to Buy Them?

Fortunes can be made and lost in the blink of an eye, and 2023 has presented investors who are just starting and veteran investors with a lot of ups and downs. While some stocks have soared to new heights, others have faltered, leaving investors to grapple with unexpected challenges. Despite the broader U.S. stock market delivering robust returns, concerns about inflation and speculation regarding prolonged high-interest rates have cast shadows over market sentiment. Against this backdrop, some prominent companies have experienced notable declines, shaping the year's narrative.

Stock performance

The S&P 500, while boasting a year-to-date gain of 16.56%, has witnessed a slowdown in growth, with a more modest 13.76% increase over the past six months. Notably, big tech mega-cap stocks such as Apple Inc. (AAPL) and Meta Platforms, Inc. (META) have faced challenges, with marginal losses recorded in recent weeks. Microsoft Corporation (MSFT) and Alphabet Inc (GOOG) have exhibited mixed performance, mirroring the shifting sentiments surrounding economic indicators.

However, our focus is on stocks that have faced more significant difficulties in 2023, as exemplified by their notable share price drops and elevated price-to-earnings ratios. Let's dive into a selection of these underperforming stocks and explore the factors contributing to their decline.

1. NerdWallet, Inc. (NRDS)

Share Price Change In 2023: -32.49%

NerdWallet, Inc. (NRDS), a financial technology company known for its finance content and building wealth, has encountered challenges amid high-interest rates. The company's troubles stem from a drop in loan demand, leading to a decline in sales. As of the second quarter of this year, 11 hedge funds had invested in NerdWallet, with Samlyn Capital emerging as the largest shareholder, holding 1.5 million shares worth $14.8 million. The stock grew initially at the beginning of the year but has dropped significantly since its high point in February.

2. DISH Network (DISH)

Share Price Change in 2023: -64.03% 

Legacy television stocks, including DISH Network (DISH), have faced challenges in 2023 due to the impact of streaming services and writers' strikes. The company's struggle for operational viability in a changing media landscape has prompted a deal with satellite operator EchoStar (SATS) in a bid to stay afloat. However, the intense competition in the broader streaming and telecom markets has posed significant hurdles for DISH Network, marking it as one of the worst-performing stocks in its sector.

3. Petco (WOOF)

Share Price Change in 2023: -68.24%

Petco (WOOF) finds itself at the crossroads of two challenging sectors in 2023—physical retail and pet stocks. The intersection of these sectors has contributed to the stock's decline, with the company facing difficulties from slowed consumer confidence and the unfortunate decline in pet adoption trends post-pandemic. Despite being in a challenging position, Petco has the potential for a rebound, given its brand position and physical footprint.

4. AMC Entertainment (AMC)

Share Price Change in 2023: -85.06%

AMC Entertainment (AMC), once a poster child for meme stocks, has experienced a tumultuous year, marked by a reverse split and dilutive efforts — it seems the problems it faced before it became a meme stock have persisted. Still, its online Reddit community has slipped away. The company's shares have plummeted nearly 80% since January and almost 98% from its 2021 high. 

AMC's struggles stem from ongoing cash bleeding and the need for emergency equity issues to address its massive $5 billion debt. Despite CEO Adam Aron's efforts to rally supporters on social media, AMC stands as one of the worst-performing stocks in 2023.

5. Chewy, Inc. (CHWY)

Share Price Change in 2023: -34.08%

Chewy, Inc. (CHWY), a pet food retailer headquartered in Florida, has faced headwinds despite the inflationary challenges in America. While managing to grow revenue and maintain cash flow health, the stock has experienced a significant share price drop. With 29 hedge funds owning CHWY's shares, Marshall Wace LLP stands out as the largest investor, holding a substantial $135 million stake. The intersection of consumer spending habits and the pet industry's dynamics has shaped Chewy's challenging year.

Bottom line

Market volatility and high interest rates throughout 2023 put stress on the economy overall, and certain companies mentioned in this list took a harder hit than most, While AMC finally came to pay the piper after being artificially inflated during COVID, others like Petco and DISH took hits that were indicative of greater macro trends and difficulties. It will be interesting to see how the economic situation changes and impacts the market as we look towards 2024.