7 Struggling Stocks to Sell Before July 2024
The stock market’s surge continues, with several major market indices making new all-time highs recently.
The explosion of artificial intelligence and semiconductor activity has been a windfall for tech industry investors. The possibility of Federal Reserve rate cuts could lift the broader economy as well.
While there are plenty of reasons for optimism on the overall market, not all stocks are poised to benefit equally. For example, these seven stocks to sell right now are in deep trouble regardless of the broader macroeconomic situation. It’s time to dump these companies before their situations worsen.
Moderna (MRNA)
Moderna (NASDAQ:MRNA) was one of the first biotech companies to develop an effective vaccine for the Covid-19 virus. Ultimately, Moderna would earn tens of billions of dollars from this vaccine. Investors bid MRNA stock to the stratosphere hoping its pandemic vaccine would be the first in a string of blockbuster products.
But Moderna has not been able to create nearly as successful a second act. At the same time, Covid-19 vaccine sales collapsed as people show less interest in taking booster shots.
As a result, the company’s revenues have plummeted, slumping from $19.3 billion in 2022 to a mere estimated $4.2 billion this year. Not surprisingly, Moderna has fallen into sharply unprofitable territory, with the company losing $4.7 billion in 2023.
MRNA stock has perked up again in recent months. This appears tied to developments with the bird flu, which reportedly killed a person in Mexico recently. Moderna has an mRNA vaccine in the works for bird flu. While this could eventually become a strong revenue source for Moderna, it seems far too premature for MRNA stock to be up nearly 50% in recent months on this development right now.
Snap (SNAP)
Social media platform Snap (NYSE:SNAP) became famous for its photos and messages that auto-delete themselves after a period of time. Unfortunately, SNAP stock rallies tend to be similarly short-lived.
SNAP stock went public in 2017 with shares going for around $27 each. Today, the stock sells for barely half that figure.
It’s not hard to explain why. Simply put, Snap has never achieved consistent profitability. It generated an operating loss every year of operations. In both 2022 and 2023, Snap lost $1.4 billion. Even by Silicon Valley standards, that’s some serious red ink.
Snap enjoyed tremendous revenue growth in 2021 as people were stuck at home and looking for more social options. However, as the economy reopened, Snap’s revenue growth slowed considerably.
Shares rallied again this year on hopes that the TikTok ban will result in more advertising activity at Snap. That’s certainly possible. However, after so many years of disappointment, investors should demand more concrete evidence of a turnaround before trusting SNAP stock again.
Symbotic (SYM)
Symbotic (NASDAQ:SYM) is an automation technology company that develops and commercializes processes that create operating efficiencies in next-generation warehouses. More specifically, Symbotic’s systems automate pallet and case processing at warehouses and distribution centers.
While Symbotic is not a household name among investors yet, it already has a surprisingly high valuation, with a market capitalization currently above $20 billion. That makes for a huge price-to-sales figure based on the company’s $1.18 billion of revenues in fiscal year 2023.
The company is also controversial. Last year, short seller Ningi Research blasted the company, saying it was overhyping its technology and that much of its revenues are tied to a questionable contract with Walmart (NYSE:WMT).
Symbotic stock is heavily sold short, and a new round of meme stock enthusiasm could give SYM stock a short-term boost. But the company’s longer-term fundamentals seem quite shaky, and the lofty valuation leaves little margin of safety at today’s price.
Zoom Video Communications (ZM)
Zoom Video Communications (NASDAQ:ZM) seemed ideally situated to benefit from developments over the past few years.
The remote work movement gave Zoom a golden opportunity to shine. Almost every professional worker used Zoom calls for communications purposes at one point during the pandemic, when the economy was shut down.
However, as the world reopened, Zoom’s growth rate plummeted. Intense competition from rivals such as Microsoft’s (NASDAQ:MSFT) Teams platform further dimmed Zoom’s outlook.
For fiscal year 2023, Zoom earned $4.4 billion in revenues. This barely budged to $4.5 billion for fiscal year 2024, and analysts see it only ticking up to $4.6 billion for fiscal year 2025. Needless to say, it’s not really appealing to see a technology company growing its revenues slower than the inflation rate.
Some bulls point to Zoom’s AI Companion as a key offering that can get its growth story rolling again. But investors shouldn’t give Zoom’s AI efforts the benefit of the doubt until there is concrete proof that the company is regaining market share and growing its addressable market.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) develops, markets and sells functional drinks and liquid supplements. It also offers post-workout functional energy drinks and protein bars.
CELH stock has been an absolute force, with shares rising hundreds of percent in recent years. That comes primarily from the company’s torrid growth rate; revenues soared from $131 million in 2020 to $1.32 billion in 2023. It’s rare to see that growth rate within the beverages sector.
However, it appears that Celsius may be reaching a saturation point in its market. A recent analyst report highlighted concerns over a rapidly slowing growth rate for Celsius’ products. Mounting competition is bound to affect both Celsius’ unit volumes and pricing in the months and years to come.
Even with the recent sell-off, Celsius shares are still trading for around 60 times forward earnings. If the company’s revenue growth rate decelerates any more, its valuation is likely to take a tumble.
AMC Entertainment (AMC)
For a minute there, it looked like markets could see a repeat of 2021’s meme stock enthusiasm.
Companies like AMC Entertainment (NYSE:AMC) saw their share prices soar. The return of Keith Gill, more commonly known as Roaring Kitty, led to hopes that heavily shorted stocks would skyrocket once again.
Unfortunately for these traders, Gill’s long-awaited livestream last week arrived to generally mixed reviews, and GameStop (NYSE:GME) shares sank following the tepid video event along with an underwhelming earnings report.
As GameStop was the center of the meme stock phenomenon, if its rally peters out, that would bode ill for other meme names like AMC as well. Aside from the meme energy, there is little to support AMC’s stock price.
Specifically, the company brought in a $39 million operating profit in 2023. That’s an improvement, as AMC had been losing money previously. However, AMC shelled out $411 million in interest last year, meaning that the creditors – rather than shareholders – have the real dibs on the company’s meager operating profits, at least for the time being. Given AMC’s weak balance sheet, don’t be surprised if the company issues equity to raise more cash to tackle its debt.
VinFast Auto (VFS)
VinFast Auto (NASDAQ:VFS) is another stock to sell now before a potential summer slump sets in.
Some traders might look at the huge collapse in VFS stock and think it must be a bargain with the stock down more than 60% over the past year. However, investors should be aware that VinFast has an absolutely massive number of outstanding shares and thus still has a $10 billion market capitalization even with the stock price under $5.
VinFast is admittedly off to a decent start for an EV company. It generated $1.2 billion in revenues last year, and analysts think it could double again in 2024. Not bad.
However, the company is running massive operating losses. VinFast also came under fire earlier in May over safety concerns. The National Highway Traffic Safety Administration announced that it is investigating VinFast over a fatal crash that occurred on April 24. The crash appears to be tied to potential defects in the steering system of a VinFast VF 8 vehicle.
In addition, VinFast is potentially delaying the construction of its planned $4 billion factory in North Carolina. This setback adds to the concerning narrative around VinFast’s operations and growth trajectory.
On the date of publication, Ian Bezek 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.
