Due to what could be an unsustainable rally for equities, you may be looking for Nasdaq stocks to sell now. We’ve had an incredible run this year, but there are some additional indiciations that our luck has come to an end. The economy is throwing mixed signals with softer job numbers than expected. Additionally, the remergence of COVID-19, the persistence of inflation, and high interest rates make for a bearish backdrop overall.
Then, there’s also the case that some of these high-flying stocks may pose outsized risks to our portfolios. Everyone loves seeing their stocks gain 40% or more in a given year, but those same gains can cause painful losses if the bears get on top of them. It may therefore be prudent to trim one’s positions in these Nasdaq stocks to sell.
So here are stocks you should consider selling this month before worst comes to worst.
SoFi (SOFI)
SoFi (NASDAQ:SOFI), a bank with significant student loan offerings, had previously sued the Biden administration to block the extension of the student loan payment pause, arguing that it negatively impacted its business. The stock has seen a decline of over 50% since its 2021 IPO. With student loan interest set to accrue again starting Sept. 1, and payments resuming in October, things look bleak for this company.
This then could be seen as a bull trap, made worse by SOFI stock’s impressive results. In Q2 2023, SoFi reported record GAAP net revenue of $498 million, a 37% increase year-over-year (YOY). Adjusted EBITDA was $77 million, up 278% from the previous year. The company added over 584,000 new members, bringing the total to over 6.2 million, a 44% increase YOY.
The company’s valuation is deemed too high, especially given the anticipated economic headwinds. Despite past growth, the current economic landscape suggests that SoFi might see increased delinquency rates on its loans, and its growth could decelerate. Other financial institutions have reported rising delinquency rates. This then makes it one of those Nasdaq stocks to sell.
Novo Nordisk (NVO)
Novo Nordisk (NASDAQ:NVO) is a biotech company that currently has glucagon-like peptide (GLP-1) agonists on the market for weight loss. While these drugs have shown promise, they come with concerning side effects and are typically prescribed only to those who haven’t had success with diet and exercise. This then may make NVO stock risky and, consequently, part of those Nasdaq stocks to sell.
There are also concerns about its current valuation. Historical data suggests that when Novo Nordisk’s valuation multiples reach such peaks, stock price growth tends to be limited or even declines in subsequent periods. While the company has significant growth potential, especially in obesity care and GLP-1, and is shielded from threats like lower insulin prices, its current valuation might be too high.
Things also look overvalud on NVO stock’s technicals. It gapped up after the open. A reversion back towards its long-term mean is therefore logical and expected.
Eli Lilly (LLY)
Eli Lilly (NASDAQ:LLY) is another major player in the GLP-1 agonist industry. The company has been working on getting a diabetes drug, Mounjaro, FDA-approved as a weight loss drug. While it has received fast-track designation from the FDA, the exact timeline for its approval as a weight loss drug in 2023 remains unclear.
Some analysts also believe that LLY stock is overvalued due to its inflated pricing, which factors in all growth through 2036, trading at nearly 60X forward earnings. Despite the potential of its diabetes drug, the stock’s current valuation surpasses historical metrics. The eventual introduction of biosimilar competitors in 2036 could impact its profitability.
Eli Lilly reported a 28% revenue increase, largely driven by sales from Mounjaro, Verzenio, Jardiance, and Taltz, and a significant sale of rights for Baqsimi. Key advancements included positive results in Alzheimer’s and obesity studies. It also offered a relatively tepid guidance in my view despite its financial success. This then makes it one of those Nasdaq stocks to sell.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
