The Federal Reserve’s aggressive interest rate hikes to tame the elevated inflation has kept the stock market under pressure this year. However, the central bank’s hawkish stance is finally yielding results, with inflation cooling down for the second consecutive month in November.
The Fed also kept its word of slowing down the pace of rate hikes by announcing a 50-basis-point increase last week, lower than the previous four hikes. The benchmark interest rate is now at its highest level in 15 years.
Officials have indicated that the central bank would continue raising rates through 2023, with no reductions until 2024. As a result, the economy is expected to slip into a recession next year.
Since a potential recessionary environment could keep the stock market under pressure, it could be wise for investors to avoid overrated stocks DoorDash, Inc. (DASH) and Faraday Future Intelligent Electric Inc. (FFIE).
DoorDash, Inc. (DASH)
DASH operates a logistics platform that connects merchants, consumers, and dashers in the United States and internationally. It operates the DoorDash marketplace, DoorDash Drive, and DoorDash Storefront.
In July, DASH shut down its robotic salad-maker arm, Chowbotics, and laid off 35 workers. The idea is based on the company’s inability to profit during the pandemic when revenues skyrocketed.
DASH’s total costs and expenses increased 46.1% year-over-year to $2 billion for the third quarter ended September 30, 2022. Its loss from operations increased 208% year-over-year to $308 million. Net loss attributable to DASH widened 192.1% year-over-year to $295 million.
In addition, its loss per share widened 156.6% year-over-year to $0.77. For nine months ended September 30, 2022, its net cash provided by operating activities declined 34.5% year-over-year to $344 million. Its adjusted gross margin was 47.4%, compared to 55.6% in the year-ago period.
Analysts expect DASH’s loss per share for the quarter ending December 31, 2022, to widen 53.3% year-over-year to $0.69. Over the past year, the stock has declined 63.6% to close the last trading session at $51.44.
DASH’s POWR Ratings reflect its weak fundamentals. The stock has an overall rating of D, equating to a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a D grade for Growth, Stability, and Sentiment. It is ranked #26 out of 28 stocks in the F-rated Internet – Services industry. Click here to see the other ratings of DASH for Value, Momentum, and Quality.
Faraday Future Intelligent Electric Inc. (FFIE)
FFIE engages in the design, development, manufacture, engineering, sale, and distribution of electric vehicles and related products in the United States and internationally. It aims to break the boundaries between the Internet, IT, creative, and auto industries with product and service offerings that integrate new energy, AI, Internet, and sharing models.
In August, several employees of FFIE called on the board and shareholders of the company to remove Executive Chairperson Susan Swenson. In a letter dated August 23, the employees alleged that Swenson had attempted to push the company into bankruptcy and restructuring.
For the fiscal third quarter ended September 30, 2022, FFIE’s total assets declined 40.4% to $540.68 million, compared to $907.43 million for the fiscal year ended December 31, 2021. Its net loss came in at $103.37 million, while its loss per share came in at $0.31.
For the nine months ended September 30, 2022, the company’s net cash used in operating activities increased 49.3% from the year-ago period to $355.11 million, and its total operating expenses increased 57.7% year-over-year to $367.07 million.
FFIE’s EPS for the quarter ended December 31, 2022, is expected to remain negative. Its revenue for fiscal 2022 is expected to decline 3.8% year-over-year to $36.25 million. Over the past year, the stock has fallen 92.6% to close the last trading session at $0.33.
FFIE’s weak fundamentals are reflected in its POWR Ratings. The company has an overall rating of F, which equates to a Strong Sell in our proprietary rating system. It is ranked #48 out of 62 stocks within the D-rated Auto & Vehicle Manufacturers industry. In addition, it has an F grade for Stability and Quality and a D for Value and Sentiment.
Click here to see the ratings of FFIE for Growth and Momentum.
DASH shares rose $1.56 (+3.03%) in premarket trading Tuesday. Year-to-date, DASH has declined -64.41%, versus a -19.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining 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.
2 Overrated Stocks Investors Should Avoid in 2023 StockNews.com
