The stock market has rallied significantly in the past two years, far more than what even some bulls would have expected. The rally has continued despite high interest rates, mostly thanks to the AI and cloud computing boom. This rally has spilled over into many other companies, and recent price action has also been surprisingly bullish.
So far this year alone, the market has shown significant resilience. The S&P 500 Index ($SPX) is less than 3% off its peak despite new tariffs and U.S.-China trade tensions.
The broader market rally could continue for much longer, but BTIG believes some particular stocks have been too hot this year, and their momentum could fall off a cliff. Here are three worth watching closely now.
Stock #1: Netflix (NFLX)
Netflix (NFLX) has been one of the strongest stocks in the market in the past three years, up almost 550%. BTIG Chief Market Technician Jonathan Krinsky noted that the stocks on his list were in “strong primary uptrends, so pullbacks are ultimately buyable…” And I certainly agree. Netflix’s pricing power is too strong for you to bet against it long term.
BTIG’s bearish position on NFLX is mostly tactical, since they believe a plateau is inevitable after such a large rally. Netflix does have solid pricing power, but recent moves like cracking down on password-sharing and price hikes may have already maximized profits for the short term. In turn, this could lead to a slowdown in bottom-line growth. But again, that’s mostly speculative. BTIG seems to be cautious due to broader market trends. It sees “big rebalances” taking place in the final quarter of this year.
Considering NFLX stock currently trades at 48 times forward earnings, a premium valuation, it would be especially susceptible to any broader-market correction. That said, NFLX is unlikely to see a dramatic decline, so I wouldn’t sell unless you’re really pessimistic.
Stock #2: Robinhood (HOOD)
Robinhood (HOOD) has truly had a gravity-defying rally, with shares up 880% in the past three years.
HOOD stock has benefited tremendously from the recent surge in Bitcoin (BTCUSD). Crypto-related revenue reached $252 million in Q1 2025, constituting over 43% of its total transaction revenue. Robinhood has also acquired crypto firms recently, including WonderFi and Bitstamp.
But the party might not last forever, according to BTIG. One threat facing Robinhood is a potential wave of competitors rushing to take its crown. The Senate recently passed a bill focused on creating a regulatory framework for stablecoins titled the “GENIUS Act,” and on top of that, Coinbase (COIN) is seeking approval from the Securities and Exchange Commission to offer tokenized stocks.
Many of Robinhood’s users are crypto-savvy, and Coinbase could attract Robinhood users if its new offering gets approved.
The SEC approval seems more likely than not. Cryptos are receiving more institutional support, especially with President Donald Trump directly backing digital currencies.
Stock #3: Lemonade (LMND)
Lemonade (LMND) is an insurance company and has seen a relatively “weaker” rally among the three stocks in this article. LMND stock is up nearly 170% in the past year, but up “just” 100% over the past three. It’s also the odd one out if you look at these stocks in terms of profitability. Both Robinhood and Netflix are very profitable at the moment, but Lemonade is not.
The company posted $62 million in losses vs. $151 million in revenue for Q1. Analysts expect EBITDA to break even in 2026, and GAAP profitability is not expected before 2027. If the broader market corrects, there’s little margin of safety.
BTIG isn’t alone here. The mean price target of $27.43 implies 38% downside risk.
