It’s a good time to be in growth stocks. The major U.S. indices have continued their ascent as publicly listed companies churn out better-than-expected earnings reports and the inflation gets back under control. The tech-heavy Nasdaq Composite has climbed 17.8% on a year-to-date basis, while its counterpart, the S&P 500, rallied around 14.7% in the same period. The May consumer price index (CPI) report that the Bureau of Labor Statistics released last week has definitely been in a catalyst in the market’s most recent rally.
Inflation in the United States is back on a downward trend, giving relief to not only consumers and investors, but also Federal Reserve officials who are looking for additional encouragement to begin easing current rate policy. The producer price index, which measures wholesale prices, also eased more than economists had predicted.
These datapoints are great for the market, but not even positive macroeconomic data will help revive the shares of these 3 growth stocks.
SentinelOne (S)
Cybersecurity is an increasingly important aspect of modern cloud technologies. The migration of enterprise data from on-premises servers to remote ones (cloud) has been key to many businesses’ digital transformation efforts. While the hosting data in the cloud is much more expensive than doing so internally, many enterprises are finding the shift to be less costly overtime.
However, having data stored in some remote data center does require special protection against cyberattacks. That’s where a company like SentinelOne (NYSE:S) comes in. The cybersecurity firm’s Singularity Platform leverages artificial intelligence models and automation to secure various endpoints across an enterprise.
In the early 2020s, SentinelOne enjoyed triple-digit revenue growth as companies who had migrated their internal systems to the cloud required more security. The global pandemic, of course, also helped to spur demand for cloud security services.
Unfortunately, SentinelOne’s growth has been negatively impacted by the uneven macroeconomic outlook. In their recent earnings call, the firm’s management team still mentions how “macroeconomic uncertainty and tighter financial conditions continue to impact customer buying behavior,” which has soured SentinelOne’s growth outlook.
S shares have plummeted 33.8% on a year-to-date basis and could fall even further as competition in the cybersecurity space intensifies, ultimately making SentinelOne a growth stock to sell in June.
Etsy (ETSY)
Etsy (NASDAQ:ETSY) is small e-commerce marketplace that connects artisans and entrepreneurs with various consumers in the United States, the United Kingdom, and continental Europe. This is another platform that experienced jaw-breaking top-line growth during the pandemic years but shortly dissipated as inflation surged and interest rates became elevated.
Despite inflation having largely decreased from its 2022 highs, Etsy’s business has not seen any significant resurgence. For the retailer’s first quarter earnings report for fiscal year 2024, revenue came in at $645.95 million, which represented year-over-year growth of barely 1%. The Etsy marketplace gross merchandise value, a measure of the value of goods bought on the platform, also decreased 5.3% year-over-year to $2.6 billion.
In the earnings report, CEO Josh Silverman wrote, “Our first quarter performance, while in line with our guidance, was pressured by the challenging environment for consumer discretionary products, which continues to be a headwind to Etsy marketplace growth.” That is all to say, as consumer discretionary spending remains muted, Etsy’s growth headwinds will remain intact.
ETSY’s share price has fallen 28.8% since the start of the year.
Celsius Holdings (CELH)
Another company targeting consumers is Celsius Holdings (NASDAQ:CELH). The company offers CELSIUS, a fitness drink or supplement designed to accelerate metabolism and burn body fat. Celsius has enjoyed phenomenal financial results over the past few years. In 2023, the energy drink company grew revenue 101.6% to $1.3 billion. Last year, also counted as Celsius Holdings’ first sizable net profit, which amounted to $226.8 million.
Unfortunately, the glamor has not lasted much into 2024. Celsius’s first quarter earnings report for fiscal year 2024 saw revenues come under Wall Street analysts’ estimates. Moreover, recent Nielsen retail data suggested Celsius might be losing its growth momentum to competitors. If subsequent data reports confirm this, CELH will definitely see its shares fall even further. Before the news broke, CELH had risen 74.5% for the year, but now the energy drinker maker’s share price has risen just 16.1%, trailing the Nasdaq Composite.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.