As 2024 approaches, it’s time for investors to optimize their portfolios and identify which stocks to sell. It’s far from being the most thrilling part of investing, but it’s imperative. Hence, if you’re holding any names on this cautionary list, now might be the time to part ways. These stocks to avoid are likely to be more of a liability than an asset. Let’s face it, divesting isn’t pleasant; however, a smart sell can sometimes be as valuable as a smart buy.
Stocks To Sell: Canoo (GOEV)
Canoo (NASDAQ:GOEV), a once-promising contender in the electric vehicle space, has hit a wall of late. The company’s dual strategy of manufacturing and licensing has fallen flat. Moreover, when its ambitions faded, Canoo shifted gears, scrambling towards belt-tightening efforts. Despite these efforts, the firm’s sails remain slack, with zero sales last quarter and a stark warning from its auditor about the company’s dwindling lifeline. Consequently, the stock has plummeted 81% year-to-date, losing more than 67% in the past six months alone.
Investors are now navigating murky waters, as the firm’s ability to stay afloat hinges on fresh capital infusions. Yet, with no commercial traction, the question looms over the lure for further investment. Hence, Canoo’s story serves as a cautionary tale in the SPAC-fueled tech flurry, a reminder that not all that glitters is gold in its rush to innovate.
Tupperware (NYSE:TUP) was once one of the more popular meme stock players, stirring up little more than investor nostalgia. With its last meaningful financial update dating back to March, the company’s enigmatic stance does remarkably little to bolster confidence. Sales are on a downtrend, and despite raking in more than $1.3 billion last year, Tupperware struggles to convert revenue into profit, casting it as a potential stock to shed from your portfolio. Top-line growth and net income margin for the trailing twelve-month stands at a deplorable -18.5% and -17.8%, respectively.
The company’s financial maneuvers, including debt restructuring and a CEO shuffle, seem less strategic and more like stalling. Even with the NYSE’s leniency, Tupperware’s days of glory appear to be fading. Therefore, with Tupperware’s lack of appeal and transparency, it’s best to deem the stock as a relic unfit for revival.
Moatable (NYSE:MTBL) asserts on its site that it specializes in acquiring, nurturing, and expanding top vertical Software-as-a-Service businesses. Its portfolio is captivating, boasting assets including Trucker Path, which is the top mobile application among North American long-distance truck drivers, brokers, and large fleet operators.
However, despite its interesting business model, it has failed to pique investor interest. The stock is down roughly 40% year-to-date, offering little upside on the back of its deplorable profitability metrics. The bulls may look at its double-digit top-line growth and go wow, but the reality is that its sales have shrunk by 71.6% from its 2017 figure of $49.5 million. More importantly, it effectively rolled back its progress toward profitability in the past several quarters, which further weighs down its attractiveness.
Online used car marketplace in Carvana (NYSE:CVNA) revved up its gross profits per unit to a record high in the third quarter, but this surface sheen masks deeper issues. The attempt to digitize the typical car buying process hasn’t shifted consumer satisfaction into high gear, and dissatisfaction looms on the horizon. This tech gloss risks leaving buyers with buyer’s remorse as the novelty wears off.
The third quarter net loss of a staggering $502 million reveals a gulf between flashy sales tactics and financial sustainability. Carvana’s bet on technology to raise prices could potentially capture some short-term gains. Still, its strategy is doomed for failure if it can’t steer the company toward actual profitability. The investor relations’ optimistic spin on their business model clashes with the stark reality of continuous monetary hemorrhage, which makes investing in Carvana incredibly unattractive.
Soluna (NASDAQ:SLNH) is heralded as a pioneer in green data center development, leveraging surplus renewable energy for power-hungry technologies. Its novel approach aims to harness computing power for crypto mining and AI research, offering a more cost-effective approach than traditional methods. Yet, despite its innovative business model, Soluna’s financials cast long shadows of doubt.
The company’s recent earnings paint a grim picture, with a significant revenue dip to $2.1 million, down 75.9% year-over-year. Although Soluna managed to narrow its net loss and cut down general expenses, these small victories are overshadowed by a decade-long decline in its stock value by 89%. The stark year-to-date loss of 59% further solidifies its status as one of the stocks to steer clear of. Hence, the company’s promising mission to redefine green computing is yet to align with the financial stability needed to assure investors.
GameStop (NYSE:GME), the progenitor of meme stock mania, is at a crossroads. The once-dominant retail player has effectively missed the next-level jump to digital, clamping onto a traditional model in a rapidly evolving sector. Ryan Cohen’s bid to steer the company into the digital age turned out to be a flashy cutscene rather than a game-changer. Despite an infusion of eCommerce executives, GameStop’s leadership lineup has witnessed multiple exits over the past year.
Now, with Cohen himself at the helm, GameStop doubles down on a comeback strategy akin to an outdated game in a next-gen market. The focus on disc-based sales in an era of digital downloads is like betting on the underdog in a boss fight, especially as it looks to trim the fat in the process. Investors looking for growth stocks might see GameStop’s strategy as a critical hit to its survival chances, making it a meme stock to level down from their portfolios.
T2 Biosystems (TTOO)
T2 Biosystems (NASDAQ:TTOO) faces a precarious financial future despite being a key player in sepsis diagnostics. The Massachusetts-based company’s stock saw its value surge earlier this year, riding the waves of retail investor enthusiasm. However, the meme stock fever has tapered off, with the stock down more than 96% year-to-date. Moreover, in the last six months alone, it has lost 81% of its value, indicative of the challenges faced by the business.
The company’s financial health, as rated by GuruFocus.com, languishes with disconcerting scores of “2 out of 10” across profitability, financial strength, and valuation. These figures paint a grim picture of the firm as a value trap, offering little upside ahead for savvy investors. Additionally, T2’s recent performance is a speculative bubble rather than a foundation for sustainable investment, cautioning even the most contrarian to tread carefully.
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