Buying One Growth Stock and Selling Another During the Tech Sell-Off

The tech-heavy Nasdaq-100 index reached a record high in 2023. More than 25% since late October. However, the index has traded flat for a month and is 3% below its greatest level, suggesting a break. Closer inspection shows several market darlings are doing worse. Nvidia shares fell 10% last week.

History shows that the stock market rises over time, so investors shouldn't worry about a sell-off. These sell-offs can be a good moment to buy equities and reduce underperforming positions. In light of the latest Nasdaq-100 sell-off, investors may choose to purchase Confluent (NASDAQ: CFLT) and sell Peloton Interactive (NASDAQ: PTON).

Confluent stock: purchase Confluent develops data-streaming technology, which modern organizations need. Businesses used to collect client data, store it on physical servers, and analyze it later. This delayed corporations from noticing patterns that could save them money and boost revenue

Cloud computing allows organizations to immediately access and consume data thanks to powerful centralized data centers. Confluent integrates everything, letting businesses quickly enter and evaluate their data. This opens up new possibilities, including live customer experiences.

For instance, live football betting needs a bookmaker to quickly calculate odds based on in-game occurrences, feed them to customers via a mobile app, and accept bets in seconds. That's impossible without data-streaming.

Walmart also manages inventory in real time with Confluent. The company integrates its physical storefronts and digital sales platforms so products can be refilled instantly before they sell out. This guarantees customers find what they need at a Walmart store and accurate inventory information on its website.

Though Confluent has over 4,960 business customers, its highest-spending cohorts are rising quickest. In 2023, 1,229 clients spent $100,000 or more, up 21% year over year. The number of consumers spending at least $5 million doubled, while 158 people spent at least $1 million, up 24%

Confluent's 2023 revenue was $777 million, up 33% from 2022 and well above management's expectation. After that impressive performance, the stock is up 35% in 2024, but it's still 67% below its 2021 tech craze peak. An chance for investors. Confluent estimates the $60 billion data streaming market could reach $100 billion by 2025. So, the company has barely scratched its potential.

Sell Peloton Interactive: Market sell-offs offer an opportunity to exit underperforming stocks, as they may struggle in adverse conditions. Some equities are protective and investors buy them in rough times. Peloton doesn't suit that description.

Peloton stock peaked at $163 in late 2020 and is now $4.32. The majority of that drop is due to decreased demand for its digitally integrated at-home workout equipment. During the epidemic, when gyms were closed and people were socially restricted, those items were a hit, but those trends have reversed, leaving Peloton with issues.

Peloton earned $4 billion in fiscal 2021 (ending June 30, 2021), and it has dropped every year since. Management expects revenue to drop 3% to $2.7 billion in fiscal 2024. Greater concern is Peloton's bottom line. In 2022, Barry McCarthy became CEO and cut staff by half, offshored manufacturing, and cut marketing costs. However, cost cutbacks are a race to the bottom when income is falling because spending less on growth projects generally reduces future revenue.

Peloton lost $195 million in the fiscal 2024 second quarter (ending Dec. 31), down from $338 million the year before. Even after adjusting for one-time and non-cash expenses such stock-based pay, the company's non-GAAP EBITDA was $82 million negative.

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