Banking

Nine Beaten-Down Stocks Must Jump 100% Just To Get Your Money Back

If you’re waiting for some of your fallen S&P 500 stocks to bounce back — hope you’re patient. Many must double in value — or more — just for you to get your money back.




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Nine stocks in the S&P 500, including communication services company Paramount Global (PARA), health care play Moderna (MRNA) and information tech PayPal (PYPL) are down so much from their highs in the past year — they need to rise 100%-plus just for them to be worth as much as they were, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.

It’s part of the cruel math of falling S&P 500 stocks — and yet another danger of holding plunging stocks or trying to buy them on the dip. Climbing back from big stock losses requires increasingly massive gains. If you’re down 5% on a stock, it only needs to rise 5.3% for you to break even. A 20% loss requires a 25% gain for you to get your money back. But a stock must gain 100% to make you whole following a 50% loss.

Lose more than 50%, though, and breaking even gets even tougher and requires a double-plus. And that’s a good reason why skilled investors know to cut losses on individual stocks to less than 10%.

Big Stock Losses Are Hard To Recover From

If you lose … … you need a gain this big to recover
5% 5.3%
10% 11.1%
20% 25.0%
30% 42.9%
50% 100.0%
70% 233.3%
90% 900.0%

Mounting Losses In S&P 500

It’s becoming more common for S&P 500 investors to suffer losses of 50%, 60% or even 70% from highs this year. And that’s going to make coming back from these massive losses take longer. Heroic gains will be needed in many cases.

All told, nearly 20 stocks in the S&P 500 are down 40% or more from their 52-week highs. And of those, nine are off 50% or more. Even if these stock double, you’ll only get back to where they were less than a year ago. Doubles, though, are pretty rare even in a good year. Just 2% of the S&P 500 pulled off a 100%-plus gain in 2021 (Moderna was one of them).

That leaves a big uphill battle for many. Take fallen meme stock, the recently renamed Paramount Global. The company, formerly ViacomCBS, on Feb. 16 took the new name Paramount Global, with the ticker PARA. Prior to the name/ticker change, shares collapsed more than 72% from their individual-investor fanned mania high of 101.97 notched on March 15, 2021. Coming back from that kind of epic crash from today’s 28.43 will take a blockbuster rally. Shares need to rally nearly 260% to regain those highs. That could take awhile: Shares are down 3% this year so far.

And it’s not just shares of smaller companies facing these tough odds.

Fallen S&P 500 Giants Need A Major Rally

It’s hard to overestimate the huge impact Moderna’s mRNA vaccine made on helping the world recover from Covid-19. But regaining its former highs will also take a miracle cure.

It’s going to take a nearly 241% rally in Moderna shares for the stock to retake its 52-week high. It’s going to be a long road back. The stock is down more than 70% from its 52-week high of 497.49 set on Aug. 10, 2021. That’s also the stock’s all-time high.

Impressing investors, though, will be more challenging than it was in the banner year for the company in 2021. The company’s 2021 profit is on pace to hit $11.4 billion, or $27.03 a share, powered by its Covid-19 vaccine rollout. That’s up from the company’s loss of $747 million in 2020. But this year, Moderna’s profit is only seen inching up roughly 5% to $12 billion, or $28.42 a share.

It’s a similar story for online payment firm PayPal.

It’s going to take a nearly 200% rally in the stock for it to return to its high. The stock, now, is down more than 66% from its all-time and 52-week high of 310.16 notched back on July 26, 2021. And a miraculous recovery isn’t looking all that likely this year, as the stock is down 45% to 103.70. Earnings growth isn’t going to help much at PayPal, either. Analysts think the company’s profit will only inch up 1.3% this year.

If you’re holding these shares hoping for a recovery, you likely have quite a wait ahead of you.

Biggest S&P 500 Rallies Needed To Undo Damage

Stocks needing the largest gains to regain losses from highs

Company Symbol All-time high date % ch. from 52 week high Stock % gain to return to 52 week high Sector
Paramount Global (PARA) 03/15/2021 -72.1% 258.9% Communication Services
Moderna (MRNA) 08/10/2021 -70.7 240.9 Health Care
Penn National Gaming (PENN) 03/15/2021 -66.8 200.8 Consumer Discretionary
PayPal Holdings (PYPL) 07/26/2021 -66.6 199.1 Information Technology
Discovery (DISCA) 03/19/2021 -61.8 161.8 Communication Services
Etsy (ETSY) 11/26/2021 -58.5 141.2 Consumer Discretionary
Twitter (TWTR) 02/25/2021 -57.5 135.1 Communication Services
Biogen (BIIB) 06/07/2021 -55.3 123.5 Health Care
Enphase Energy (ENPH) 11/22/2021 -50.3 101.2 Information Technology
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz

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