Market Plunge Deepens as Crypto and Tech Stocks Suffer Significant Losses
The financial markets are experiencing a period of intense volatility, marked by steep declines in cryptocurrencies and technology stocks. Earning season has amplified these movements, with investors grappling with widespread sell-offs across various asset classes. The current market sentiment is one of significant fear, leading to substantial drops from recent all-time highs.
Cryptocurrencies Hit Hard
Bitcoin, once a symbol of digital asset growth, has seen a dramatic fall of 50% from its peak just a few months ago. Ethereum has fared even worse, plummeting over 70% from its all-time highs. This significant depreciation in the crypto market reflects a broader investor flight from riskier assets.
Tech Stocks Face a ‘SAS Apocalypse’
The software-as-a-service (SaaS) sector, often a darling of growth investors, is experiencing what some are calling a ‘SAS apocalypse.’ Companies like Salesforce (CRM) have seen their stock prices slashed by nearly 50% from their December 2024 highs. Despite significant revenue and net income growth since 2019 – nearly tripling revenue to approximately $38 billion and increasing net income sixfold to $6.19 billion – Salesforce’s stock price has remained stagnant, highlighting the critical importance of valuation in a bear market. The speaker notes that Salesforce’s stock is trading at the same price as it was before the COVID-19 pandemic, despite the company’s vastly improved financial performance.
Other major SaaS players are also reeling. Service Now (NOW) is down 56% from its 2025 highs, and Adobe (ADBE) has been cut by more than half, down 51% from its peak. Intuit (INTU), known for its QuickBooks and TurboTax software, is also down nearly 50%.
Valuations Suggest a Potential Bottom
Despite the ongoing declines, there are indications that the market may be approaching a bottom for these SaaS stocks, primarily driven by their significantly reduced valuations. Adobe is trading at a forward Price-to-Earnings (P/E) ratio of 11, Salesforce at 14, and Service Now at 24. While these companies are expected to maintain double-digit or high single-digit growth for years to come, these P/E ratios are considered ‘stupidly’ low by the speaker. The analysis suggests that while further minor declines of 5-15% are possible, a repeat of the 30-50% drops seen recently is unlikely for these fundamentally strong companies.
In contrast, traditional retail giants like Walmart (WMT) are trading at a forward P/E of 44, significantly higher than Adobe and Salesforce. The speaker argues that the disruption risk faced by SaaS companies can also be applied to brick-and-mortar retailers like Walmart, which face potential disruption from e-commerce giants like Amazon.
Brokerages and Fintech Stocks Under Pressure
Brokerage firms and fintech companies are also feeling the heat. Robinhood (HOOD), once a popular trading platform, has fallen 52% from its all-time highs reached in October. This decline is attributed to reduced assets under management as portfolios shrink, less trading activity, and a potential decrease in new customers due to market disillusionment.
Coinbase (COIN), a major cryptocurrency exchange, is down 62% from its October highs, reflecting the broader downturn in the crypto market. MicroStrategy (MSTR), a company heavily invested in Bitcoin, has seen its stock plummet by 76% from its peak, with an additional 3.5% drop in after-hours trading.
Commodities and Specific Stocks Face Declines
Even traditional commodities are not immune. Silver has experienced a sharp decline, dropping nearly 40% in just a few trading days. The speaker also highlights the performance of specific stocks:
- SoFi (SOFI): This stock has broken below $20, losing 30% of its value in the past month, with an additional 3% drop after hours.
- Palantir (PLTR): Down over 37% from its recent all-time highs, the stock is approaching levels the speaker previously considered a floor. The speaker expresses surprise at the potential for further downside, possibly towards $100 or $110.
Earnings Season Mixed Bag: Amazon and Cosmetics Companies
Earnings season has revealed mixed results. Amazon (AMZN) saw its stock drop 10% after hours, following a 4.4% decline during regular trading hours. This significant after-hours drop is particularly notable given the stock’s intraday performance.
Cosmetics companies ELF Beauty (ELF) and Estee Lauder (EL) experienced contrasting performances. ELF Beauty’s stock dropped 9.19% despite reporting strong financial results, including a 38% increase in net sales and a 128% surge in net income. The speaker notes this occurred after the stock was up 15% in after-hours trading the previous day, suggesting the broader market sentiment is overriding positive company-specific news.
Estee Lauder, on the other hand, showed a significant turnaround. The company reported a 6% increase in total revenues year-over-year, with strong growth across all categories. Crucially, operating income swung from a substantial loss in the previous year to a profit of $401 million, and net earnings improved dramatically to $162 million from a $590 million loss. This turnaround represents a significant improvement from an ‘F-grade’ income statement reported last year.
Investor Takeaways and Personal Trades
The speaker, who has personally benefited significantly from both ELF Beauty (up nearly 1,000%) and Estee Lauder (up 39%), views both stocks as buys at current levels, despite recent declines. However, the sheer volume of ‘deals’ in the market presents a challenge in allocating capital effectively.
The speaker also discussed closing a leveraged hedge against Tesla (TSLZ) for a profit of nearly $11,000 (34%), citing doubts about the market’s ability to sustain significant further downturns. This doubt is based on the strong capital expenditure plans of tech giants like Google, Amazon, and Meta, and the crucial role of companies like Nvidia (NVDA) and Apple (AAPL) as market leaders. Nvidia is a key beneficiary of AI-related capex, while Apple is seen as a relative safe haven due to its strong financial performance and shareholder returns, not heavily investing in AI capex like its peers.
The speaker maintains two primary hedges against a market downturn: cash reserves and the TSLZ ETF (though considering selling the latter). The speaker acknowledges a tendency to exit hedges prematurely, having missed out on larger gains with previous hedges on Duolingo and Chipotle.
Looking ahead, the speaker expresses a belief that despite the current fear, Salesforce could be a significant long-term winner, based on internal projections. The speaker also revealed buying tens of thousands of dollars worth of stocks, though the specifics were not detailed in the provided transcript excerpt.
“The price you pay is extremely important. Do not let anyone ever tell you it doesn’t matter, just buy it. It’s um got great growth. Baloney. The only people saying that are people that don’t know how to run valuations and they’re likely saying it during a peak euphoric bull market.”
Source: The Market Panic is about to TURN😳‼️ (YouTube)
