Is the stock market’s current bull run real, or are we in the midst of a bear market rally? That’s the debate raging right now as equities soften after posting their longest winning streak in two years. Investor sentiment towards stocks turned bullish after the Fed held interest rates steady earlier in November and the yield on the 10-year Treasury bond declined from a recent high above 5%. Investors have also been buoyed by signs the U.S. economy is beginning to slow, with the October jobs report showing weakness in the labor market.
However, not everyone is convinced we’re at the start of a sustained year-end rally. Mike Wilson, the top stock market analyst at investment bank Morgan Stanley (NYSE:MS), claims we’re in the midst of a bear market rally, and the bulls will run out of steam by December. A slate of poor financial results from several leading companies has also poured cold water on equities. Here are three stocks about to get absolutely crushed in Q4.
Robinhood Markets (HOOD)
Two years after the meme stock craze that propelled it to great heights, Robinhood Markets (NASDAQ:HOOD) continues to put up disappointing earnings and declining user numbers for its online trading platform. On the day of this writing, HOOD stock dropped 14% after the still unprofitable company reported weaker-than-expected third-quarter financial results and issued data that showed trading activity on its platform continued to slow.
Robinhood reported a Q3 loss of 9 cents per share, compared with a loss of 20 cents a share a year earlier. In the quarter ended Sept. 30, revenue rose 29% to $467 million but missed Wall Street forecasts of $480 million. However, the metric that really led HOOD stock to sell off was the number of monthly active users on Robinhood’s online trading platform, which declined 16% from a year earlier to 10.3 million. HOOD stock has declined 77% since its market debut in 2021.
eBay (EBAY)
EBay (NASDAQ:EBAY) is another once mighty tech concern that has fallen on hard times. The e-commerce company’s stock dropped 5% immediately after it issued Q3 financial results and offered up forward guidance that was weaker than expected on Wall Street. The company reported Q3 revenue of $2.5 billion, up 5% from a year ago — in line with analyst forecasts. The company also announced earnings per share (EPS) of $1.03, beating consensus estimates of $1.
However, eBay now expects Q4 revenue of $2.47 billion to $2.53 billion, with growth ranging from a 1% decline to a 2% increase. The company forecasted profits of $1 to $1.05 a share in Q4. Wall Street estimates had called for $2.6 billion in Q4 revenue and profits of $1.06 per share. The company said it is seeing strong demand for a new feature that uses artificial intelligence (AI) to help sellers write product descriptions. However, the weak outlook for the current holiday sales quarter overshadowed any positives for the company.
EBAY stock is down 5% this year. Time to sell.
Warner Bros. Discovery (WBD)
Entertainment giant Warner Bros. Discovery (NASDAQ:WBD) dropped 19% after the company reported a decline in advertising revenue and poor streaming subscriber numbers. Specifically, Warne Bros. Discovery announced a loss per share of 17 cents versus a loss of 6 cents that was expected. Revenue in Q3 amounted to $9.98 billion, matching Wall Street forecasts. However, the company also reported ad revenue at its legacy TV networks fell 12% from a year ago amid declining viewership.
Streaming subscription numbers also came in weak, with Warner Bros. Discovery reporting 95.1 million global subscribers for its streaming services, a 700,000 decrease from the previous quarter and below expectations of 95.4 million subscribers. The company is also saddled with $45 billion of long-term debt. Looking ahead, Warner Bros. Discovery warned of a continued slump in advertising revenue and impacts to its finances from the ongoing Hollywood actors strike.
Down 33% over the last 6 months, WBD stock could continue to be crushed in Q4.
On the date of publication, Joel Baglole did not hold (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.
