LCID - 3 Tech Stocks to Sell Before These Titans Topple
2024-05-29 13:17:09 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Not all technology stocks are equal. While certain areas of the tech sector like microchips, cybersecurity and anything related to artificial intelligence ( AI ) are booming right now, others are struggling. Electric vehicles , smartphones and e-commerce platforms that rely on consumer discretionary spending. Looking at these company’s current financial results emphasizes that there are plenty of tech stocks to sell right now.
The current environment requires investors to be selective with their stock picks . Understanding which trades are working and which aren’t is key to success in the current market. Coming out of first-quarter earnings season, some clear winners and losers have emerged among tech stocks. Investors would be smart to adjust their portfolios and move capital into shares that are on the rise.
Here are three tech stocks to sell before these titans topple.
Shopify (SHOP)
E-commerce company Shopify (NYSE: SHOP ) saw its share price fall 18% after it reported a surprise loss for its fiscal first quarter. The company announced a loss of 21 cents a share, which was much worse than a profit of 9 cents that was the consensus expectation among analysts. Revenue in the quarter totaled $1.9 billion, which topped Wall Street estimates of $1.83 billion. Sales were up 23% from a year earlier.
The financial loss in fiscal Q1 was blamed on the sale of Shopify’s logistics business and related fees that the company incurred on the sale. Still, the forward guidance provided by the company was underwhelming. Shopify said that for fiscal Q2, revenue will grow at a high-teens percentage rate year-over-year (YOY). Analysts had forecast a Q2 sales increase of 19%. SHOP stock is down 21% on the year with no bottom in sight.
Lucid Group (LCID)
Things appear to be going from bad to worse at electric vehicle maker Lucid Group (NASDAQ: LCID ). The company just announced that it is cutting 6% of its workforce , or about 400 employees, as its struggles with a sales decline and slowing growth. The company said that it will incur $25 million in charges related to the workforce reduction, which it plans to complete by the end of this year’s third quarter. At the end of 2023, Lucid had 6,500 full-time employees worldwide.
While the company’s main electric vehicle, the Lucid Air sedan, has won critical praise from analysts and the automotive press, its high price has led to declining sales . Currently, the base model Lucid Air costs $71,000 and the top model costs more than $250,000. At those prices, Lucid is selling to a small and exclusive group of consumers. LCID stock is down 35% this year. Since its 2021 initial public offering ( IPO ), the share price has fallen 73%.
eBay (EBAY)
eBay (NASDAQ: EBAY ) has enjoyed a nice run this year . The stock is up 19% since January. However, the e-commerce company’s share price has pulled back after offering second-quarter guidance that disappointed analysts and investors. For Q1 of this year, eBay reported earnings per share ( EPS ) of $1.25 and revenue of $2.6 billion. The Q1 results beat Wall Street consensus forecasts of $1.20 a share in profit and $2.53 billion in sales.
The strong results were due to promoted listings and display advertisements that grew 30% from a year earlier. Unfortunately, the strong Q1 print was trumped by disappointing Q2 guidance. eBay said that it expects revenue of $2.49 billion to $2.54 billion. Profits for the current quarter are anticipated at $1.10 to $1.15 a share. Wall Street had estimated $2.56 billion in sales and profits of $1.14 a share for Q2.
Management said the current guidance reflects a downturn in e-commerce growth , notably for consumer discretionary items. The company said it will continue to work towards resuming topline growth in the mid-single digits. While EBAY stock is up on the year, it remains one of the tech stocks to sell as it currently trades 35% below the peak it reached in 2021 during the pandemic.
On the date of publication, Joel Baglole did not hold (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 .
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
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