The Nasdaq index, which is largely comprised of technology stocks, has enjoyed a blistering run in 2023. As we prepare to close out the year, the Nasdaq is up 42% and has largely recovered from the brutal downturn seen in 2022.
Technology stocks have clearly been the big story for markets over the past year due largely to the emergence of artificial intelligence (AI). That said, there are more than 2,500 stocks listed on the Nasdaq and not all of them have lit the world on fire over the past 12 months. There are plenty of stocks that continue to struggle and have not participated in the market rally.
Worse, many stocks on the Nasdaq look vulnerable to continued declines in 2024. Here are three Nasdaq stocks that are about to get absolutely crushed.
Affirm Holdings (AFRM)
How is the buy now, pay later trade going to hold up as the economy slows? Not very well, according to a lot of analysts who are sounding the alarm on Affirm Holdings (NASDAQ:AFRM), the market leader in the BNPL space with 14 million borrowers and 235,000 merchants as customers.
But Affirm could be saddled with loan defaults should the economy tank and the shine come off BNPL. This could be especially problematic given that Affirm remains unprofitable, most recently posting a quarterly net loss of $172 million.
The erratic nature of the loan business that is buy now, pay later has led to volatility in AFRM stock. While the company’s shares have risen 357% this year, the share price remains 65% lower than when it made its market debut in January 2021. Peak-to-trough, AFRM stock fell 95%. The share price dropped from $164 a share in November 2021 to $8 this past spring before starting to recover. But the investors who have bought AFRM stock in recent months will likely be just as quick to sell it if the company runs into trouble.
Cisco Systems (CSCO)
Nasdaq stock Cisco Systems (NASDAQ:CSCO) is already starting to get crushed. The networking hardware company’s stock plunged 11% after it recently issued weak forward guidance. Over the last 12 months, the company’s shares haven’t budged while the Nasdaq index has gained 40%. Over the past five years, CSCO stock is up only 8% making it one of the worst performing large-cap tech stocks that’s listed on the Nasdaq.
While Cisco’s most recent quarterly results bested Wall Street forecasts, the company provided a grim outlook that’s led to investor sentiment towards the stock worsening. Cisco reported that its new product orders slowed during the most recent quarter and said that one or two quarters of its shipped products are still waiting to be implemented.
Cisco is also in the process of acquiring data analytics software maker Splunk (NASDAQ:SPLK) for $28 billion, adding additional uncertainty around CSCO stock.
Rivian Automotive (RIVN)
Barron’s recently ran an article saying that the electric vehicle bubble has burst and investors should run for cover. This is extremely bad news for electric vehicle start-up Rivian Automotive (NASDAQ:RIVN) whose business and stock continue to struggle. In the past 12 months, RIVN stock has fallen 25%, bringing its decline since the company went public in November 2021 to 85%. In October, the shares plunged 10% in one day after Rivian lowered its guidance and announced plans to raise more cash.
Rivian warned that sales in the current fourth quarter of the year are likely to be lower than previously forecast. At the same time, the company said that it plans to issue $1.5 billion of convertible notes, which is debt that can be converted into stock. The move will dilute the holdings of current shareholders and was frowned upon by analysts. The company also said that it lost an average of $33,000 on each electric truck that it sold in this year’s second quarter. It won’t take much more to completely crush RIVN stock.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
