While the Fed is continuously raising interest rates to reduce the sky-high inflation and the Senate recently passed the Inflation Reduction spending, many economists do not expect these measures, particularly the government spending, to reduce inflation in the near term.
The U.S. economy contracted for two consecutive quarters of the year, making many analysts believe that the recession has already arrived. ARK Invest CEO Cathie Wood said, “We believe we are in a recession, two consecutive quarters of GDP declines is the beginning of that definition.”
Since the concerns over the Fed’s potential rate hikes looking at relatively upbeat economic data are expected to keep the market volatile, we think it could be wise to avoid high-volume stocks AMC Entertainment Holdings, Inc. (AMC), Snap Inc. (SNAP), NIO Inc. (NIO), Ping Identity Holding Corp. (PING), and Shopify Inc. (SHOP), which do not possess enough fundamental strength and growth prospects.
AMC Entertainment Holdings, Inc. (AMC)
AMC, along with its subsidiaries, engages in the theatrical exhibition business. The company owns, operates, or has interests in theaters in the United States and Europe. As of March 1, 2022, it operated approximately 950 theaters and 10,600 screens. The company is headquartered in Leawood, Kansas. It has traded at an average volume of 45,998,517 over the past three months.
During the second quarter ending June 30, 2022, AMC's operating loss amounted to $16.10 million. Its net loss came in at $121.60 million, while its adjusted loss per share amounted to $0.20. The company’s net cash used in operating activities amounted to $76.60 million for the quarter ending $76.60 million for the quarter ending June 30, 2022.
AMC's EPS is expected to remain negative in the third quarter ending September 2022. The stock has plunged 26.7% over the past year and 46.8% over the past nine months.
AMC's POWR Ratings are consistent with this bleak outlook. The company's overall D rating translates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AMC has an F grade for Stability and a D for Value and Sentiment. It is ranked last among the eight stocks in the F-rated Entertainment - Movies/Studios industry. To see additional POWR Ratings for Momentum, Growth, and Quality for AMC, click here.
Snap Inc. (SNAP)
SNAP functions 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, that enable people to communicate visually through short videos and images. The stock has traded at an average volume of 57,448,203 over the past three months.
For the second quarter ending June 30, 2022, SNAP’s operating loss increased 108% year-over-year to $400.94 million. Its net loss increased 178% year-over-year to $422.07 million, while its Non-GAAP loss per share came in at $0.02 compared to an EPS of $0.10 in the previous quarter. The company’s net cash used in operating activities increased 22.7% from its year-ago value to $124.08 million.
SNAP’s EPS is expected to remain negative in the third quarter ending September 2022. The stock has declined 77.9% year-to-date and 86.3% over the past year.
SNAP’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of D, which equates to Sell in our proprietary rating system. The stock has an F grade for Stability and a D for Quality and Sentiment. In the F-rated Internet industry, it is ranked #60 of 66 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the SNAP’s Growth, Value, and Momentum rating here.
NIO Inc. (NIO)
Headquartered in Shanghai, China, NIO designs, develops, manufactures, and sells smart electric vehicles in China. It offers five, six, and seven-seater electric SUVs and smart electric sedans. The company also provides energy and service packages to its users; design and technology development activities. NIO has traded at an average volume of 61,614,158 over the past three months.
In the first quarter ending March 31, 2022, NIO’s loss from operations increased 639.7% year-over-year to RMB2.19 billion ($324.05 million). Its adjusted net loss grew 269.3% from its year-ago value to RMB1.31 billion ($193.84 million), while its adjusted loss per share rose 243.5% from its prior-year quarter to RMB0.79.
The EPS is expected to remain negative in the second quarter ending June 2022. The stock has declined 54% over the past year.
NIO's weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. The stock also has an F grade for Growth and a D for Value and Stability. In the F-rated Auto & Vehicle Manufacturers industry, it is ranked 54 of 67 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the NIO rating for Momentum, Sentiment, and Quality here.
Ping Identity Holding Corp. (PING)
PING, doing business as Ping Identity Corporation, offers intelligent identity solutions for the enterprise in the United States and worldwide. Its Ping Intelligent Identity platform provides access to the cloud, mobile, Software-as-a-Service, and on-premise applications with customers, workforce, and partners. The stock has traded at an average volume of 1,611,345 over the past three months.
For the second quarter ending June 30, 2022, PING’s total revenue declined 7.8% year-over-year to $72.03 million. Its loss from operations increased 170.1% from its year-ago value to $40.91 million, while its net loss grew 335.8% from its prior-year quarter to $47.85 million. The company’s loss per share rose 330.8% from its prior-year quarter to $0.56.
Analysts expect PING’s EPS to remain negative in the third quarter ending September 2022. The stock has declined 4.3% year-to-date.
PING’s poor prospects are also apparent in its POWR Ratings. The stock has an overall F grade, equating to a Strong Sell in our proprietary rating system. It also has an F grade for Sentiment and a D for Quality and Value. PING is ranked #28 of 29 stocks in the F-rated Software - Security industry.
Click here to see the additional POWR Ratings for PING (Growth, Stability, and Momentum)
Shopify Inc. (SHOP)
Headquartered in Ottawa, Canada, SHOP provides an e-commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company's platform permits merchants to display, manage, market, and sell its products through various sales channels. It has traded at an average volume of 39,341,872 over the past three months.
In the second quarter ending June 30, 2022, SHOP’s loss from operations came in at $190.21 million compared to an income of $139.44 million in the prior quarter. Its net loss came in at $1.20 billion compared to a net income of $879.09 billion in the previous period, while its loss per share came in at $0.95 compared to an EPS of $0.69 in the previous period.
The EPS is expected to remain negative in the third quarter ending September 2022. The company's shares have plunged 73.9% over the past year and 74.1% over the past nine months.
SHOP's poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. It has an F grade for Sentiment and a D for Stability and Growth.
SHOP is ranked last of 30 stocks in the F-rated Internet - Services industry. Click here to see the additional POWR Ratings for SHOP (Quality, Value, and Momentum).
AMC shares were trading at $22.52 per share on Tuesday afternoon, down $1.44 (-6.01%). Year-to-date, AMC has declined -17.21%, versus a -12.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
5 High-Volume Stocks You Might Want to Avoid Right Now StockNews.com
