4 Reasons Why 2016 Wasn't So Bad for Tech Stocks
Image source: Netflix.
There are a lot of people saying that it's great that 2016 is over. We lost so many celebrities over the past year. We had a polarizing election that -- no matter where you stand -- divided households and is testing friendships.
However, the year wasn't so bad for investors. Let's take a look at some of the things that went right for growth investors.
1. The major market indexes moved higher
There's always a chance that you invested in the wrong stocks and industries, but most investors are coming out of 2016 with more money than they had going into the year. The S&P 500 rose nearly 10% in 2016, as of noon on Friday with just a couple of hours left of trading for the year.The tech-heavy Nasdaq Composite rose 8%.
It wasn't a spectacular year, but after a rough start that found so many market darlings crushed by Feb. 2016 was a year of healthy gains.
2. The Twilio IPO opens the door for more unicorns
Twilio (NYSE: TWLO)is one of the year's most successful debutantes. The cloud-based communications specialist went public at $15 early in the summer. The stock briefly traded above $70 three months later.
Twilio stock will close out the year below $30, indicating a rough road since peaking in September. However, that's not the right way to approach the IPO's success. This is a company that went public in late June at $15 and will have nearly doubled by the end of 2016. This is the kind of success that will make it that much more conducive for other privately held speedsters to go public in 2017. We've already seen Snapchat parent Snap Inc. jockey for position to complete its IPO in the coming months. The success of Twilio and other tech rookies helped pave the way for some compelling offerings in the year ahead.
3. Netflix is closing out the year in the black
The S&P 500's biggest winner in 2013 and 2015 seemed as if it was going to be a big loser in 2016. Netflix (NASDAQ: NFLX) kicked off the year north of $100, slipped into the double digits, and things only got worse after a rough second quarter, where it fell short of its historically conservative guidance.
It seemed as if this would be the beginning of a problematic trend for Netflix, but it didn't play out that way. Netflix took off after blowing past its subscriber targets for the third quarter. The S&P 500's top gainer in 2013 and 2015 won't repeat again in 2016, but it will close out the year with a modest gain -- something that didn't seem likely earlier this year.
4. The S&P 500's biggest gainer in 2016 is a tech stock
Netflix didn't beat out the other 499 components in 2016, but a fellow tech stock is leading the way. Shares of NVIDIA(NASDAQ: NVDA) have more than tripled this year, easily leading the way. There was only one other S&P 500 stock that even doubled in 2016.
NVIDIA may have earned its keep as a maker of graphics cards for PCs, but these days NVIDIA's chips have a starring role in virtual reality, artificial intelligence, and self-driving cars. It also only helps that NVIDIA has beaten Wall Street's profit targets with ease in each of the past four quarters.
There will be plenty of reasons to look back at 2016 with regret, but tech investors will -- for the most part -- be closing out the year in better shape than they were in when the year began.
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Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix and Nvidia. The Motley Fool has a disclosure policy.