There have been rumbles about the Federal Reserve raising interest rates for a while now; any time Jerome Powell, the chair of the Federal Reserve, is scheduled to make an announcement, the market waits with bated breath.
To date, those fears have proven unfounded, as the persistence of the pandemic and its drag on the economy have delayed any action being taken.
Inflation has been rising, and Powell believes raising interest rates should slow it down. Since the beginning of the new year, though, the inevitable lifting of interest rates appears closer than ever. Based on their trading history since the start of 2022, the market believes the below companies will suffer due to the rate increase.
Since the beginning of the pandemic, AMC Entertainment (NYSE: AMC) has gotten more publicity as one of the leading meme stocks on Reddit than it has from showing movies in their theatres. After COVID-19 virtually wiped out their operations, AMC stayed afloat via capital raises. Investors appear to believe that the cash-strapped company will continue to struggle for the foreseeable future, with rising interest rates exacerbating the problem.
AMC last traded at $21.78, down 17.8% YTD.
Sports betting is one of the hottest trends right now. After the U.S. federal government removed the nationwide ban, individual states passed legislation to allow gambling on sports in their states. Most recently, New York approved DraftKings (NASDAQ: DKNG) and other online sports betting platforms to operate in the state. However, after the stock more than doubled in 2021, it has been coming back down to earth. Investors appear to believe that the company needs to drop further before the value becomes attractive again. Management will need to spend large sums of money to keep expanding into new markets, so rising interest rates will present headwinds.
Draftkings last traded at $24.78, down 10.8% YTD.
After gaining global recognition for its COVID-19 vaccine, Moderna (NYSE: MRNA) saw its stock price skyrocket; despite falling over 50% from its Fall 2021 highs, the stock price is still 10x what it was at the start of the pandemic. With talk of rising interest rates making investors seek shelter in value stocks, more profit-taking is likely on the horizon.
Moderna last traded at $210.67, down 10.4% YTD.
Streaming has been one of the few winners of the COVID-19 pandemic, and Roku (NASDAQ: ROKU) was no exception. People sheltering in place consumed a staggering amount of streaming content, and Roku saw its subscriber base reach all-time highs. Unfortunately, like other popular stocks that benefited from the pandemic, Roku spent the second half of 2022 giving up a significant portion of its recent gains. There’s still plenty of room to fall to pre-pandemic levels, so investors should consider whether they want to go along for the ride.
Roku last traded at $172.70, down 26% YTD.
Wealthy VC does not hold a position in any of the stocks mentioned in this article.