The first quarter of 2023 was a mixed bag for many stocks. And five, in particular, were among the worst performers. According to Morningstar, First Republic Bank (FRC), Bed Bath & Beyond (BBBY), Groupon (GRPN), Lumen Technologies (LUMN) and Zions Bancorp (ZION) were among the five worst-performing stocks in the first quarter. We’ll discuss why those stocks struggled and how investors can approach the markets going forward.
If you have questions about your portfolio, consider speaking with a financial advisor.
The Biggest Losers Among Stocks in Q1 2023
According to Morningstar, First Republic Bank, Bed Bath & Beyond, Groupon, Lumen Technologies and Zions Bancorp saw substantial losses in the first quarter.
First Republic Bank and Zions Bancorp were notable bank stocks to take a hit, as they saw a decline of 88.5% and 38.6%, respectively. This may not come as a surprise given that Silicon Valley Bank and Signature Bank collapsed in March, which sent a wave of panic through the banking industry.
Bed Bath & Beyond stock fell 83%. The retail store announced in February that it would close 150 stores and commence layoffs as the company looked to avoid going out of business. It also didn’t help that near the end of the first quarter, Bed Bath & Beyond announced it would sell $300 million worth of shares.
Groupon’s stock had the third-worst performance, according to Morningstar’s list, as it fell 50.9% during the first quarter of 2023. According to Morningstar, Groupon had 19% fewer customers during the fourth quarter of 2022 and saw $32.8 million in operating losses.
Lumen Technologies, meanwhile had the fourth-largest decline in the first quarter, down 49.2%. And there is concern that the company will continue trending downward in the near future, according to Morningstar.
“We’re concerned that no amount of investment can make up for a sizable, declining legacy revenue base, which we think will roll off over time under any scenario,” says Morningstar equity analyst Matthew Dolgin.
How Investors Can Evaluate Stocks
Understand Long-Term Potential
Stocks will have moments during various quarters where they have positive or negative returns. If a stock deals with a sizeable loss during one quarter, it may not spell disaster. Its future outlook is often a more important aspect to think about. One quarter’s performance, whether it’s positive or negative, rarely defines a stock.
For example, if a stock posted positive returns for three consecutive quarters, then tanked in the fourth quarter, that doesn’t mean that you should sell the stock. Instead, analyzing stock fundamentals – which can involve reviewing company earnings reports, financial metrics and news reports – is more complex than reviewing any one quarter.
Diversify Your Risk
Not all investors need to maintain exposure to single stocks. Holding a basket of stocks in a mutual fund or exchange-traded fund (ETF), for example, can spread your assets across more stocks and potentially lower your risk.
Stock funds can specialize in a range of investment strategies and types of equity exposure.
Speak to a Financial Advisor
If you are an investor who is unsure of where to turn to for quality stocks, now would be a good time to speak to a financial advisor. An advisor can help you analyze your portfolio and determine your risk tolerance and risk profile.
An advisor can also help you manage your portfolio with your goals in mind and assist with understanding the tax implications of your investment decisions.
Bottom Line
One quarter doesn’t define a stock. A stock’s body of work over multiple quarters shows signs of a pattern or a trend that will help determine whether or not it’s a good investment going forward. And if you have trouble deciding where and how to invest, an advisor is a good resource to consider.
Tips for Investing in Stocks
- Whether you’re new to investing or a veteran of the stock market, a financial advisor can help you refine your portfolio. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- No matter how hard you try, you cannot predict the stock market. But having the right mix of stocks, bonds and cash can help you spread your risk. Our asset allocation calculator can guide you toward an appropriate blend based on your risk tolerance.
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