The stock market has been volatile for quite some time owing to the Fed’s hawkish comments to tame the stubbornly high inflation and other macroeconomic uncertainties. Amid this, let us probe into popular stocks, Peloton Interactive, Inc. (PTON), Tilray Brands, Inc. (TLRY), and ContextLogic Inc. (WISH), to see whether they are worth investors’ attention in 2023.
The fusion of robust hiring and resilient spending despite sky-high inflation could diminish the likelihood of a Fed pivot. Moreover, the Fed’s hawkish comments have raised concerns about an impending recession.
Economist David Rosenberg recently repudiated investors' hopes for a "no landing" scenario and believes that the idea that the United States can keep growing and avoid a recession or a slowdown is a "fairy tale."
The early-year stock rally is stalled on the backs of dashed investor optimism, and the stock market is anticipated to remain volatile for a while. According to an American Association of Individual Investors survey, the bullishness among investors, which was the highest in early February since 2021, has plunged to 21.6%, indicating investors are turning pessimistic.
Amid such volatilities, PTON, TLRY, and WISH could be best avoided now due to their weak fundamentals.
Peloton Interactive, Inc. (PTON)
PTON offers interactive fitness products through two segments: Connected Fitness Products and Subscription. It sells connected fitness products with touchscreens that stream live and on-demand classes under the brand names Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+.
In terms of forward EV/Sales, PTON is trading at 2.16x, 83.7% higher than the industry average of 1.18x. Likewise, its forward Price/Sales multiple of 1.60 is 73.2% higher than the industry average of 0.92.
PTON’s total revenue decreased 30.1% year-over-year to $792.70 million for the second quarter that ended December 31, 2022. Its gross profit fell 16.4% from the prior-year quarter to $235 million. The company’s net loss and net loss per share came in at $335.40 million and $0.98, respectively. In addition, its adjusted EBITDA stood at negative $122.40 million.
Street expects PTON’s revenue to decline 26.4% year-over-year to $710.03 million for the third quarter (ending March 31, 2023). Its EPS is expected to come in at negative $0.51 for the same quarter. Additionally, PTON missed the consensus revenue estimates in three of the trailing four quarters.
Over the past year, the stock has declined 55% to close the last trading session at $12.70. Over the past five days, the stock plunged 6.6%.
PTON’s POWR Ratings reflect this weak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an F grade for Stability and Sentiment and a D for Value and Quality. Within the D-rated 58 stock Consumer Goods industry, it is ranked #55.
In addition to the POWR Ratings stated above, we have also rated PTON for Growth and Momentum. Click here to get all PTON ratings.
Tilray Brands, Inc. (TLRY)
Headquartered in Leamington, Canada, TLRY operates globally as a cannabis-lifestyle and consumer packaged goods company. It operates through four segments Cannabis Business; Distribution Business; Beverage Alcohol Business; and Wellness Business.
The stock’s forward EV/EBITDA is trading at 29.36x, 121.7% higher than the industry average of 13.25x.
Its trailing 12-month gross profit margin of 20.59% is 63% lower than the 55.70% industry average. Its trailing-12-month EBITDA margin of negative 11.43% compares to the 3.74% industry average.
For the fiscal second quarter that ended November 30, 2022, TLRY’s net revenue declined 7.1% year-over-year to $144.14 million. During the same period, the company’s total operating expenses increased 4.1% year-over-year to $91.92 million. Furthermore, the company’s adjusted net loss and loss per share came in at $35.31 million and $0.06, respectively.
Street expects TLRY’s EPS for the fiscal year ending May 2023 to come in at negative $0.28. Its revenue for the same period is expected to decline 3% year-over-year to $609.77 million. Also, it missed the consensus revenue estimates in three of the trailing four quarters.
Over the past year, the stock has lost 54.1% to close the last trading day at $2.82. Over the past five days, it has plunged 6%.
TLRY’s POWR Ratings reflect its bleak prospects. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It also has an F grade for Value, Momentum, and Sentiment and a D for Stability and Quality. In the D-rated Medical – Pharmaceuticals industry, it is ranked #172 of 173 stocks.
Click here to see the additional POWR Ratings for TLRY (Growth).
ContextLogic Inc. (WISH)
WISH operates as a mobile e-commerce company in Europe, North America, South America, and internationally. The company operates Wish, an e-commerce platform that connects users to merchants.
WISH’s trailing-12-month gross profit margin of 29.07% is 17.7% lower than the industry average of 35.30%. Its EBITDA and net income margins of negative 68.65% and 67.25% compare to the industry averages of 11.28% and 4.78%.
WISH’s revenue came in at $123 million for the fiscal fourth quarter that ended December 31, 2022, down 57.4% year-over-year. Its gross profit declined 78.3% year-over-year to $26 million. Its adjusted EBITDA came in at negative $95 million, compared to negative $23 million in the prior-year period.
Moreover, its net loss and net loss per share increased 89.7% and 77.8% year-over-year to $110 million and $0.16, respectively.
Street expects WISH’s revenue and EPS to fall 29.2% and 76.1% year-over-year to $133.73 million and negative $0.11 for the fiscal first quarter ending March 2023. Also, it missed the consensus revenue estimates in all of the trailing four quarters.
Over the past year, the stock has lost 77.5% to close the last trading session at $0.51. Over the past five days, it has declined by 33.6%.
WISH’s weak fundamentals are reflected in its POWR Ratings. Its overall D grade equates to Sell in our proprietary rating system.
The stock has a D grade for Growth and Quality and an F for Stability. It is ranked #57 out of 61 stocks in the D-rated Internet industry.
Get the additional POWR Ratings for WISH (Value, Momentum, and Sentiment) here.
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PTON shares were unchanged in premarket trading Monday. Year-to-date, PTON has gained 59.95%, versus a 3.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
Are These 3 Popular Stocks Worth Your Time in 2023? StockNews.com
