With 2023 slowly coming to an end, consider identifying stocks for potential sales before 2024 begins. Economic uncertainties, inflation and interest rate concerns contribute to stock market volatility. That’s especially true with underperforming speculative growth stocks, so accepting losses and realigning portfolios may be wise.
Here are three overhyped stocks you should steer clear of now.
Peloton Interactive (PTON)
Peloton Interactive’s (NASDAQ:PTON) current stock price is significantly lower than its triple-digit levels three years ago. Despite recent stability and a partnership with Lululemon (NASDAQ:LULU), the outlook remains uncertain, with sell-side forecasts predicting continued negative earnings for the next three fiscal years.
Peloton is still struggling. Although the company’s net loss shrunk year-over-year, it still reported a $159.3 million loss for Q1 FY24. Financial concerns deepen as revenue fell 3% to $595.5 million — 7% compared to Q4 FY23.
PTON stock declined on November 7 after a downgrade from Deutsche Bank (NYSE:DB) analyst Lee Horowitz, moving from Buy to Hold with a reduced price target of $4 per share. Following the note, PTON stock declined 4.2%, with over 200,000 shares traded compared to its daily average of around 12.5 million.
Mullen Automotive (MULN)
Mullen Automotive’s (NASDAQ:MULN) stock faced a downward trend, breaking key support levels. Shareholders anticipate a crucial vote on December 15 for Mullen CEO David Michery’s proposed third reverse stock split this year to meet Nasdaq listing requirements. The ongoing reverse split discussions contributed to the stock’s decline.
Mullen Automotive, having implemented several reverse stock splits, now proposes another, aiming to address a Nasdaq delisting threat. The company’s proxy statement outlines a reverse split with a ratio of 1-for-2 to 1-for-100. The deadline is Jan. 22, 2024, to maintain a closing bid price of $1 per share for 20 consecutive trading sessions.
Mullen Automotive’s recent reverse share split proposal reflects desperation. Even if it avoids delisting, Mullen remains a speculative, zero-revenue startup in a competitive industry. Exercise caution, explore profitable alternatives and avoid the risks associated with MULN stock.
Palantir Technologies (PLTR)
Palantir Technologies (NYSE:PLTR) maintains robust performance, with signs of a shifting revenue base. Despite government revenue falling slightly below expectations at $308 million, commercial revenue surged by 23% to $251 million. CEO Alexander Karp anticipates substantial growth for the company by 2025.
However, debates persist on whether Palantir’s solutions outpace other data analysis firms. Despite robust recent earnings, analyst Brian White highlighted commercial activity’s vulnerability to economic shifts and unpredictable government deals, cautioning against overestimating Palantir’s value solely based on one quarter.
Despite a post-earnings rally, PLTR is currently trading around 80 times forward earnings, raising concerns about premium valuation. Additionally, insider selling, notably by a venture capital fund linked to co-founder Peter Thiel, adds a layer of uncertainty.
On the date of publication, Chris MacDonald 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.
