Last week, the Fed announced its third consecutive 75-basis-point rate hike and hinted at maintaining its hawkish stance. With the central bank prioritizing inflation control over economic pain, recession fears are increasing.
The stock market has been experiencing extreme volatility due to concerns over the consequences of the continued interest rate hikes. The CBOE Volatility Index is up more than 90% year-to-date.
Earlier this month, Goldman Sachs (GS) cut its forecast for 2023 GDP to 1.1%, down from its prior projection of 1.5%, as aggressive rate hikes will likely push the jobless rate higher than expected. With the Fed keen on continuing its hawkish stance, it seems unlikely that the economy will achieve a soft landing and markets will return to stability anytime soon.
Given this backdrop, we think fundamentally weak stocks Uber Technologies, Inc. (UBER), Coinbase Global, Inc. (COIN), Peloton Interactive, Inc. (PTON), FuelCell Energy, Inc. (FCEL), and Marathon Digital Holdings, Inc. (MARA) are best avoided now.
Uber Technologies, Inc. (UBER)
UBER develops and operates proprietary technology applications through Mobility, Delivery, and Freight segments. The company enables consumers to connect with independent ride service providers for ridesharing services and restaurants and food delivery service providers for meal preparation and delivery services.
For the fiscal second quarter that ended June 30, 2022, UBER’s total cost and expenses increased 71.7% year-over-year to $8.79 billion. The company’s net loss came in at $2.60 billion, compared to a net income of $1.14 billion in the year-ago period. Also, its loss per share came in at $1.33, compared to an EPS of $0.58 in the year-ago period.
Analysts expect UBER’s EPS to remain negative in fiscal 2022. It failed to surpass Street EPS estimates in three of the trailing four quarters. The stock has declined 34.2% year-to-date to close the last trading session at $27.57.
UBER's POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, equating to Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
UBER has a D grade for Value, Momentum, Stability, and Sentiment. Within the D-rated Technology - Services industry, it is ranked #57 of 80 stocks. To see the other ratings of UBER for Growth and Quality, click here.
Coinbase Global, Inc. (COIN)
COIN is a financial technology company that provides end-to-end economic infrastructure and technology. The company offers the primary financial account in the crypto economy for retailers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions, and technology and services that enable ecosystem partners to build crypto-based applications and securely accept crypto-asset payments.
COIN’s net revenue for the fiscal second quarter ended June 30, 2022, declined 63.7% year-over-year to $808.32 million. Its total operating expenses increased 36.9% year-over-year to $1.85 billion.
The company’s net loss came in at $1.09 billion, compared to a net income of $1.61 billion in the year-ago period. Also, its loss per share came in at $4.98, compared to an EPS of $6.42 in the year-ago period.
Analysts expect COIN’s EPS to remain negative for fiscal 2022 and decrease 45.1% per annum over the next five years. Its revenue for the quarter ending September 30, 2022, is expected to decline 50.1% year-over-year to $654.44 million. The stock has lost 75% year-to-date to close the last trading session at $63.05.
COIN’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Growth, Value, Stability, and Sentiment and a D for Quality. It is ranked last out of 147 stocks in the F-rated Software - Application industry. Click here to see COIN’s rating for Momentum.
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+.
PTON’s total revenue decreased 27.6% year-over-year to $678.70 million for the fourth quarter ended June 30, 2022. Its operating loss widened 298.6% from the prior-year quarter to $1.20 billion.
The company’s net loss came in at $1.24 billion, widening 297.3% year-over-year. In addition, its adjusted EBITDA loss also widened 540.1% from the year-ago value to $288.70 million. Its loss per share stood at $3.68, up 250.5% year-over-year.
Street expects PTON’s revenues to decline 20.6% year-over-year to $638.95 million in the first quarter ending September 30, 2022. Its EPS is expected to decrease 76.5% per annum over the next five years and remain negative in the current year. It has failed to surpass the EPS estimates in each of the trailing four quarters.
The stock has declined 77% year-to-date to close the last trading session at $8.20.
PTON’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system.
It has an F grade for Sentiment and a D for Value, Stability, and Quality. Among the 60 stocks in the Consumer Goods industry, it is ranked #58. To see additional ratings of PTON for Growth and Momentum, click here.
FuelCell Energy, Inc. (FCEL)
FCEL engages in the design, manufacture, installation, sale, and servicing of stationary fuel cell power plants for distributed baseload power generation. The company serves its customers, including utilities, independent power producers, industrial and process applications, healthcare, and commercial markets, with sustainable products and solutions.
FCEL’s gross loss for the fiscal third quarter ended July 31, 2022, came in at $4.18 million versus a gross profit of $1.10 million in the year-ago period. Its loss from operations widened 164.5% year-over-year to $27.99 million.
The company’s net loss and loss per share widened by 136.1% and 100% year-over-year to $30.21 million and $0.08, respectively. Also, its adjusted EBITDA loss stood at $20.77 million, up 301.5% year-over-year.
Analysts expect FCEL’s EPS for fiscal 2022 to remain negative. The company’s revenue for the quarter ending January 31, 2023, is expected to decline 12.4% year-over-year to $27.87 million. It failed to surpass consensus EPS estimates in each of the trailing four quarters.
Shares of FCEL have declined 32.7% year-to-date to close the last trading session at $3.50.
FCEL’s POWR Ratings reflect this bleak outlook. It has an overall F rating, which translates to a Strong Sell in our proprietary rating system.
It has an F grade for Stability, Sentiment, and Quality and a D for Value. It is ranked #83 out of 89 stocks in the Industrial – Equipment industry. Click here to see the additional ratings of FCEL for Growth and Momentum.
Marathon Digital Holdings, Inc. (MARA)
MARA is a digital asset company that focuses on the blockchain ecosystem and the generation of digital assets. The company holds bitcoins in an investment fund.
On August 1, 2022, MARA expanded its credit facility by increasing its debt funding capacity by $100 million. This debt facility is expected to increase the company’s debt burden.
MARA’s revenues for the fiscal second quarter ended June 30, 2022, decreased 15% year-over-year to $24.92 million. Its operating loss widened 61.6% from the year-ago value to $178.21 million.
The company’s net loss came in at $191.65 million, widening 76% from the year-ago period, while its adjusted EBITDA loss widened 40.1% year-over-year to $147.20 million. Also, its loss per share widened by 60.5% year-over-year to $1.75.
Analysts expect MARA’s EPS to remain negative for fiscal 2022. Its revenue for the quarter ending September 30, 2022, is expected to decline 46.1% year-over-year to $27.85 million. It failed to surpass the consensus EPS estimates in each of the trailing four quarters. The stock has lost 70% year-to-date to close the last trading session at $9.87.
MARA’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Growth, Value, Stability, Sentiment, and Quality. Click here to see MARA’s rating for Momentum.
UBER shares were trading at $27.84 per share on Wednesday afternoon, up $0.27 (+0.98%). Year-to-date, UBER has declined -33.60%, versus a -21.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
Owning These 5 Stocks Won't Make You Rich in 2022 StockNews.com
