Wall Street has been abuzz with the return of the meme stock craze in recent months. However, as the stock market is expected to remain under considerable pressure in the coming months, it may be wise to avoid fundamentally weak overestimated stocks Rivian Automotive (RIVN), Coinbase (COIN), DraftKings (DKNG), AMC Entertainment (AMC), and Bed Bath. & Beyond (BBBY). Let’s discuss it….
After a hiatus, Wall Street has seen the return of the meme frenzy in recent months. Last year, meme headlines took the entire world by storm following their logic-defying rallies despite fundamental weakness.
Because the huge rises in meme stocks were not supported by fundamentals or positive news, these stocks failed to sustain the price levels they reached last year. And many retail investors took heavy losses when these meme stocks eventually collapsed to earth.
The return of the meme frenzy this year is evident from the big rallies of Bed Bath & Beyond Inc. (BBBY) and AMC Entertainment Holdings, Inc. (AMC) earlier this year. However, the hype surrounding these meme headlines quickly died down due to the uncertain macroeconomic environment.
The Fed raised the benchmark interest rate by 75 basis points yesterday. Central bank officials now predict that the key rate will end this year in a range of 4.25% to 4.5%, from 3.25% previously indicated to 3.5% in June.
This should keep the stock market under pressure in the coming months. In this context, it may be wise to avoid fundamentally weak overestimated stocks Rivian Automotive, Inc. (RIVN), Coinbase Global, Inc. (CURRENCY), DraftKings Inc. (DKNG), AMC Entertainment Holdings, Inc. (AMC) and Bed Bath & Beyond Inc. (BBY).
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops and manufactures electric vehicles (EVs) and sells them directly to consumer and commercial markets. The company’s services include digitally enabled financing, telematics-based insurance, proactive vehicle subscription and software services, charging solutions, a data-driven vehicle resale program and FleetOS, a centralized subscription platform for fleet management.
RIVN’s total operating expenses increased 73.1% year-over-year to $ 1 billion for the second quarter ended June 30, 2022. loss from operations expanded 194.5% yoy to $ 1.71 billion.
Its adjusted net loss increased 153.1% yoy to $ 1.47 billion. Additionally, its Adjusted EBITDA loss increased 133.4% yoy to $ 1.30 billion. Additionally, its adjusted loss per share was $ 1.62, up from $ 5.75 a year ago.
Analysts expect RIVN’s EPS for the quarter ended September 30, 2022, is expected to remain negative. Its EPS is expected to decline by 31.6% per annum over the next five years. The stock fell 66.1% year to date to close the last trading session at $ 35.10.
RIVN’s weak fundamentals are reflected in his POWR ratings. The stock has an overall rating of F, which equates to a strong sale in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, each of which is optimally weighted.
It has an F rating for Value, Stability and Quality. It is ranked No. 60 out of 63 titles with classification D Car and vehicle manufacturers industry. Click here to see RIVN’s other ratings for Growth, Momentum and Sentiment.
Coinbase Global, Inc. (CURRENCY)
COIN is a financial technology company that provides end-to-end cost-effective infrastructure and technologies. The company offers the leading financial account in the crypto economy for retailers, a market with a liquidity pool for transactions in crypto assets for institutions and technology and services that enable ecosystem partners to build crypto-based applications and accept securely payments of crypto assets.
On August 9, 2022, COIN announced that it was facing a federal investigation into the possible sale of unregistered securities. If the ongoing investigation against the company is true, it could seriously undermine its business model while it is subject to various penalties and hefty fines.
COIN’s net revenue for the fiscal second quarter ended June 30, 2022 decreased 63.7% year-over-year to $ 808.32 million. Its total operating expenses increased 36.9% yoy to $ 1.85 billion. The company’s net loss was $ 1.09 billion, compared to a net profit of $ 1.61 billion in the period a year ago. Additionally, its loss per share was $ 4.98, compared to an EPS of $ 6.42 a year ago.
For the quarter ended September 30, 2022, COIN’s EPS is expected to be negative. Its revenue for the quarter ended December 31, 2022 is expected to decline 69.7% yoy to $ 757.83 million. The stock fell 73.2% year to date to close the last trading session at $ 67.64.
COIN’s POWR ratings reflect this gloomy outlook. It has an overall rating of F, which results in a strong sale in our proprietary rating system.
It has an F rating for Growth, Stability and Feeling and a D for Value. Within the classification F Software application sector, ranks 148th out of 149 stocks. Click here to see other COIN ratings for Momentum and Quality.
DraftKings Inc. (DKNG)
DKNG is a sports entertainment and digital game company. It provides multi-channel sports betting and gaming technologies, powering sports and gaming entertainment for operators in 17 countries. In addition to DraftKings, the company operates Golden Nugget Online Gaming, an iGaming product and gaming brand, in three states.
DKNG’s operating loss was $ 308.92 million for the second quarter ended June 30, 2022. The company’s adjusted EBITDA loss increased 24% year-over-year to $ 118.13 million. Its net loss was $ 217.10 million.
Analysts expect DKNG’s EPS for the quarter ended September 30, 2022 to remain negative. Over the past year, the stock fell 68.3% to close the last trading session at $ 16.72.
DKNG’s weak outlook is reflected in its POWR ratings. It has an overall rating of F, which equates to a strong sale in our proprietary rating system.
It has an F grade for Stability and a D for Value and Quality. It is ranked as the last of the 27 D-rated titles Entertainment – Casino / Gambling industry. Click here to see DKNG’s other ratings for Growth, Momentum and Sentiment.
AMC Entertainment Holdings, Inc. (AMC)
AMC and its subsidiaries are involved in theater exhibitions. The company owns, operates or has interests in theaters in the United States and Europe.
AMC’s operating expenses and expenses increased 59.5% yoy to $ 1.18 billion in the second quarter ended June 30, 2022. The company’s adjusted net loss shrank 70% yoy to 102.80 million dollars. Its adjusted loss per share was $ 0.20, compared with $ 0.71 for the period a year ago.
For the quarter ended September 30, 2022, AMC’s EPS is expected to remain negative. Over the past year, the stock fell 77.8% to close the last trading session at $ 8.60.
AMC’s POWR ratings are consistent with this gloomy outlook. It has an overall rating of D, which results in a sale in our proprietary rating system.
It has an F grade for Stability and Sentiment. Within the classification F Entertainment: movies / studios sector, it is ranked last out of six titles. To see AMC’s other ratings for Growth, Value, Momentum and Quality, Click here.
Bed Bath & Beyond Inc. (BBY)
BBBY operates a chain of retail stores. The company sells household items, bathroom items, kitchen textiles, and home furniture. It sells its offering through various websites and applications.
Net sales of BBBY decreased 25.1% yoy to $ 1.46 billion in the first quarter ended May 28, 2022. The company’s loss of Adjusted EBITDA was $ 224 million, compared with a Adjusted EBITDA of $ 86 million.
Its adjusted net loss was $ 225.23 million, compared with a net profit of $ 4.92 million. Additionally, its adjusted loss per share was $ 2.83, compared with an adjusted EPS of $ 0.05.
Analysts expect EPS for the current quarter to be negative. Its revenue for fiscal year 2023 is expected to decline 21.4% yoy to $ 6.18 billion. It failed to surpass the consensus EPS estimates in each of the final four quarters. Over the past year, the stock has lost 68.6% to close the last trading session at $ 7.27.
The poor prospects of BBBY are also evident in its POWR ratings. The stock has an overall D rating, which is equivalent to Sell in our proprietary rating system.
It has an F grade for Stability and Feeling and a D for Growth and Momentum. He is ranked # 58 out of 62 titles in the Home improvement and goods industry. Click here to see other BBBY ratings for Value and Quality.
RIVN shares were up $ 0.07 (+ 0.20%) in pre-market trading on Thursday. Since the beginning of the year, RIVN has fallen -66.08%, compared to a -19.57% increase in the benchmark S&P 500 index over the same period.
About the author: Dipanjan Banchur
Since he was in elementary school, Dipanjan was interested in the stock market. This led him to obtain a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
The post 5 overrated stocks on Wall Street to avoid right now appeared first StockNews.com