LCID - 3 Stocks to Flee Before They Fall Off a Financial Cliff
2024-06-18 14:00:28 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
With the current bullishness in the stock market and an anticipated sustained rally, it’s best to steer clear of unstable stocks to sell.
Investors can effectively redirect their focus toward fruitful investments by offloading risky assets. Moreover, many investing pundits believe the stock market is currently littered with overhyped stocks. Hence, rotating out of overhyped stocks to sell could ensure portfolio stability ahead of a sustained bull run.
These three stocks to sell offer limited upside, marked by significant losses and stunted top-line growth. Each of these companies faces skepticism over their future prospects. Moreover, these stocks face a consistent pattern of negative returns. Hence, these combined factors cast doubt on their long-term viability and attractiveness as investments. Keep reading to learn more about three lackluster stocks to sell set to continue eroding shareholder value for the foreseeable future.
Lucid Group (LCID)
Embattled Chinese EV maker Lucid Group (NASDAQ: LCID ) was once a promising story in its burgeoning niche. However, while the saying goes, “When the going gets tough, the tough get going,” this adage doesn’t quite hold up for Lucid.
Despite posting a 40% jump in EV deliveries on a year-over-year (YOY) basis in the first quarter (Q1), the firm delivered only 1,967 vehicles . Moreover, it posted a sizeable net loss of $680.8 million, positioning the firm on a daunting path of financial losses.
Once again, the Saudi Private Investment Fund swooped in to rescue the company, injecting a fresh $1 billion . This move highlights the substantial funding needed to keep the company afloat.
Moreover, the company’s $172 million for the quarter fell short of expectations by $10 million. This shortfall in sales and heavy capital expenditures needed to scale production paints a grim picture of Lucid’s financial health.
AMC Entertainment (AMC)
AMC Entertainment (NYSE: AMC ) is one of the most popular meme stocks that continues struggling to show signs of a durable recovery. It has capitalized on its bloated meme stock valuations to attract investor capital through successive dilutive share offerings. Despite the efforts and ventures into new income streams such as the AMC-branded candy, the cinema giant reported a staggering $100 million net loss in its most recent quarter.
Moreover, AMC’s challenges are further exacerbated by a 5.8% YOY drop in U.S. attendance in Q1 and a massive $268 million cash burn over the past year. With the secular shift towards streaming services, that trend will likely continue. The shift to streaming effectively reshapes the entertainment landscape, suggesting that the company’s current strategies must be revised. Consequently, we’ve seen the stock tank 88% last year and more than 98% in the past five years.
Beyond Meat (BYND)
Beyond Meat (NASDAQ: BYND ) is another popular meme stock, offering little stability or potential growth catalysts ahead. It recently posted a worrying 18% slump in sales with $54 million in net losses. For the past eight consecutive quarters, BYND has posted negative sales growth and a negative EPS. Despite riding the wave of the plant-based eating trend at its peak from 2016 to 2019, it has consistently posted net losses since 2016.
The CEO of Beyond Meat admitted the drop in demand for several products, including the soon-to-be-discontinued Beyond Meat Jerky. The overall softness in demand points to deeper issues with the firm’s product lineup and lackluster market strategy. Though the retail trading frenzy momentarily reignited interest in the stock, banking on a potential short squeeze is speculative at best. Hence, it’s best to avoid investing in BYND stock, as it continues to burn shareholder value.
On the date of publication, Muslim Farooque 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 .
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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