In the high-stakes poker game of investing, understanding the lay of the land is crucial. Firstly, word on the street is there’s a brewing bubble with tech stocks. Subsequently, experts are placing their bets against overvalued tech equities ready for a sharp downturn.
Moreover, the rumored tech sector downturn is casting long shadows, making those underperforming tech shares look even more ominous. So, let’s be clear-eyed about those tech darlings that may not shine so brightly tomorrow.
With bearish tech signals flashing and the looming specter of unsustainable tech valuations, it might be time for a portfolio spring cleaning.
Peloton Interactive (PTON)
Peloton Interactive’s (NASDAQ:PTON) journey in the tech stock arena seems to be losing momentum. The company’s year-to-date losses have swelled to an eye-popping 47%. Dive deeper into its financial health, and the strains become more evident. Its revenue slipped by 5.4% to land at $642.2 million. Meanwhile, the net income doesn’t offer much comfort either. It plummeted, registering a decline of 80.7% to a distressing -$241.8 million.
Now, while some market enthusiasts believe in the underlying value of Peloton’s subscription model, it appears rudderless. The absence of a tangible catalyst only adds weight to its bearish trajectory. Reports are rife with pessimistic outlooks, suggesting a gloomy path ahead. In fact, even its strategic partnership with Lululemon Athletica (NASDAQ:LULU) failed to elicit much enthusiasm among analysts. Concerns about increased churn rates and fiscal challenges are now more pronounced than ever. The balance sheet doesn’t offer solace, with liabilities exceeding assets by a daunting $290 million.
This past month, Carvana’s (NYSE:CVNA) stock wasn’t cruising. It careened, dropping a stark 32%. For tech investors hunting for stocks to sell, this could be your not-so-subtle nudge. But what’s got everyone hitting the brakes on a company once dubbed the auto industry’s shooting star?
As per its latest financials, Carvana raked in $2.97 billion in revenue. But here’s the kicker, that’s a dip of 23.6% from the previous year. Sure, they tightened the belt on operating expenses by 36.9%, but with a glaring net loss of $58 million and an EPS screeching at negative 55 cents, it’s hardly a joyride.
Coinbase Global (COIN)
Coinbase Global (NASDAQ:COIN), with its blazing 111% rise in the past month, might seem like Wall Street’s latest darling. But as with any grand show, sometimes the off-stage drama overshadows the main event.
Amid its glittering ambition of morphing into a financial behemoth, Coinbase delivered a sobering performance with a 17.5% dip in revenue. The cherry on this not-so-sweet cake? A net loss of $97.4 million and a net profit margin languishing in the red at -14.7%.
But wait, there’s more. Just when we thought Coinbase was pulling up its financial socks, its balance sheet gave pause. Cash reserves have dipped 9.2% to $5.17 billion. Liabilities increased by 32.4% to a whopping $131.9 billion. Even with assets increasing by 30.5%, its hard to ignore those pesky liabilities.
Robinhood Markets (HOOD)
In the tumultuous world of tech stocks, it’s wise to tread with caution. The financial tapestry for Robinhood Markets (NASDAQ:HOOD) over the past year certainly corroborates this sentiment. Despite boasting a year-on-year revenue jump of 52.8% to reach $486 million, it’s hard to ignore the glaring fact that HOOD stock has depreciated by a staggering 23.8%. While its latest earnings depict a commendable net income surge of 108.5% to $25 million, the numbers just scratch the surface of a complex narrative.
Drilling deeper into the dynamics, recent events shade some light on the stock’s performance. The company’s alliance with the Washington Wizards might grab headlines, but the more pertinent news is the considerable recent stock sales by Chief Creative Officer Baiju Bhatt. Furthermore, a looming $100 million setback due to legal and regulatory challenges and a 4% dip in Monthly Active Users in August suggest turbulent times ahead.
In the unpredictable realm of tech stocks, Snap (NYSE:SNAP) stands out as a concerning case. Despite the attention it has garnered, the past year saw Snap faltering with a 6% dip. The recent earnings report is even more worrisome. Although it reported a revenue of $1.19 billion, indicating a marginal 5.3% year-over-year increase, the company still recorded a net loss of $368.3 million, a minor 2.4% improvement from the previous year.
The company’s balance sheet paints an unsettling picture. Its cash and short-term investments plunged by 18.4% to $3.61 billion, while total assets shrunk by 6.8% to $7.72 billion. Coupled with its liabilities sitting at a hefty $5.23 billion and rumors of internal missteps and escalating costs, it’s no wonder investors are on edge. Despite these troubling signs, Snap did report a decent Q3 earnings, and a 12% increase in daily active users year-over-year. But even with a Q3 revenue surpassing expectations by $80 million, it’s not enough to dispel the looming shadows.
On the publication date, Faizan Farooque did not hold (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.