Inflation surged 8.3% in August, surpassing economists' estimates. Moreover, market volatility is rife ahead of the Fed's upcoming meet and rising odds of a third consecutive 75-bps rate hike. The CBOE Volatility Index is up 51.2% year-to-date.
Goldman Sachs expects a 75-bps rate hike in September and a 50-bps hike in November. Amid such monetary tightening, recession fears are swelling up. According to a Bank of America Corporation (BAC) survey, 47% of investors admitted to taking on lower-than-normal risk levels.
Furthermore, Mitsubishi UFJ Financial Group, Inc. (MUFG) expects a short U.S. recession to arrive in 2023, followed by a moderate recovery.
Given this backdrop, we think fundamentally weak stocks Warner Bros. Discovery, Inc. (WBD), Snap Inc. (SNAP), and ChargePoint Holdings, Inc. (CHPT), which are trading near their 52-week lows, might be best avoided now.
Warner Bros. Discovery, Inc. (WBD)
Media company WBD provides content across various distribution platforms in approximately 50 languages worldwide. It also produces, develops, and distributes feature films, television, gaming, and other content in different physical and digital formats.
WBD's total revenues came in at $9.83 billion for the second quarter ended June 30, 2022, up 220.9% year-over-year. However, its operating loss came in at $3.64 billion compared to an income of $779 million in the year-ago period. Also, its net loss came in at $3.42 billion, compared to an income of $672 million in the prior-year period.
WBD's EPS is expected to decline 111.5% year-over-year to negative $0.20 in 2022. It missed EPS estimates in all four trailing quarters. Over the past year, the stock has lost 51.6% to close the last trading session at $12.71.
WBD's POWR Ratings reflect its poor prospects. It has an overall F grade, which indicates a Strong Sell. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a D grade for Growth, Stability, Sentiment, and Quality. Click here to access the additional POWR Ratings for WBD (Value and Momentum). WBD is ranked last among 17 stocks in the F-rated Entertainment - Media Producers industry.
Snap Inc. (SNAP)
SNAP operates as a camera company in North America, Europe, and internationally. The company offers Snapchat, a camera application with various functionalities, such as Camera, Communication, Snap Map, Stories, and Spotlight.
For the second quarter ended June 30, 2022, SNAP's revenue came in at $1.11 billion, up 13.1% year-over-year. However, its net loss came in at $422.07 million, up 178.3% year-over-year, while its non-GAAP loss per share came in at $0.02, compared to an EPS of $0.10 in the previous period.
SNAP's EPS is expected to decrease 92% year-over-year to $0.04 in 2022. Over the past year, the stock has lost 83.9% to close the last trading session at $11.52.
SNAP has an overall F grade, equating to a Strong Sell in our POWR Ratings system. Also, it has an F grade for Stability and Sentiment and a D for Growth, Momentum, and Quality.
Click here to access the SNAP ratings for Value. It is ranked #58 of 64 stocks in the F-rated Internet industry.
ChargePoint Holdings, Inc. (CHPT)
CHPT provides electric vehicle (EV) charging networks and charging solutions in the United States and internationally. It offers a portfolio of hardware, software, and services for commercial, fleet, and residential customers.
On July 27, 2022, CHPT announced its partnership with Charge Across Town and the State of California to deploy EV chargers at multifamily properties. However, it might take some time for the project to generate significant returns for the company.
For the second quarter ended July 31, 2022, CHPT's total revenue increased 93% year-over-year to $108.29 million. However, its net loss increased marginally year-over-year to $92.70 million. Moreover, its loss from operations came in at $90.37 million, up 21.6% year-over-year.
CHPT's EPS is expected to decrease 27.9% year-over-year to negative $0.78 in 2023. Its EPS is estimated to remain negative in 2024. Also, it missed EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 14% to close the last trading session at $18.18.
CHPT's POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. In addition, the stock has an F grade for Value and Stability and a D for Quality.
We also have graded CHPT for Growth, Momentum, and Sentiment. Click here to access all of CHPT's ratings. It is ranked #79 out of 90 stocks in the Industrial – Equipment industry.
WBD shares were trading at $13.17 per share on Thursday afternoon, up $0.46 (+3.62%). Year-to-date, WBD has declined -48.35%, versus a -17.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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