Investors need to understand and be able to steer clear of companies that have a poor future outlook. Whether from reduced financial guidance, overall financial instability, management issues, or relevancy surrounding their product and or services. Some companies struggle with the changing times, and investors don’t want to be aboard a sinking ship. These are the F-Rated stocks you want to kick out of your portfolio.
These are a few different companies that investors should be aware of, and it’s not a good time to invest in these companies from a wide range of factors that I dive into below. They have all experienced swift downturns in their share price and have fallen into financial uncertainty.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID), located in Newark, California, is a luxury electric vehicle maker that builds electric vehicle batteries and powertrains. They offer their flagship vehicle, the Lucid Air, which is a luxury sedan, and then in late 2024, their new electric SUV, the Lucid Gravity, is expected to be released.
Recently, they have experienced some shifts in leadership from the announcement on Nov. 7 that Marc Winterhoff will become their new chief operating officer. On Dec. 11, Lucid Group announced that Sherry House, their chief financial officer, would be stepping away from the position at the end of the year. On Nov. 7, Lucid Group announced its earnings for the third quarter, which showed that total revenue fell by 29% and its net loss expanded by 19% compared to the previous year. They also lowered their delivery guidance for the remainder of the year from approximately 10,000 vehicles to 8,000-8,500. However, their production timeline for the Lucid Gravity is still on track and will be unveiled in late 2024.
Their stock price has been falling for multiple years, partly due to the company’s financial instability. In late 2021, their stock was trading at more than $50 per share, and now it’s trading at below $5 per share. Also, it is continuing to fall. Lucid Group is putting all its eggs in one basket for their new vehicle, the Lucid Gravity, which they have very high hopes will help the company find its financial footing and keep afloat.
Peloton Interactive (PTON)
Peloton Interactive (NASDAQ:PTON), headquartered in New York, New York, is an exercise equipment manufacturer that provides its customers with an interactive fitness platform. They offer several pieces of equipment, including the Peloton Bike, Peloton Tread and the Peloton Row. Their equipment is also equipped with a touchscreen so that exercise classes can be streamed through their equipment.
Peloton shares were trading at over $150 per share during the height of the pandemic, which led to a sharp increase in sales for the company due to many individuals opting to stay home and exercise using their equipment due to gym closures. However, following this inflated period of sales for Peloton, several issues have risen, including recalls, subscription cancellations and issues regarding their financial stability.
Their most recent earnings report, released on Nov. 2, stated that total revenue fell by 3%, and their net loss shrank by 61% compared to the previous year. On Dec. 14, Peloton announced that they are appointing Lauren Weinberg as their new chief marketing officer. Hopefully this new CMO will help them out, but until then, this will be one of the F-Rated stocks.
Moderna (MRNA)
Moderna (NASDAQ:MRNA), located in Cambridge, Massachusetts, is a leading producer of vaccines and other therapies to treat infectious, cardiovascular, autoimmune and other rare diseases.
Since its peak share price in the middle of 2021, more than $450 per share, the company has lost more than 80% of its value. Their share price has fallen by 55% in the last year alone. Similar to Peloton, but for various reasons, their stock skyrocketed during 2021 due to the increased production of their COVID-19 vaccine. However, since then, the stock has experienced a drastic downfall similar to other companies that saw inflated profits during the pandemic, like the abovementioned Peloton Interactive and Pfizer (NYSE:PFE), another biotech company with a widely used COVID-19 vaccine.
On Nov. 11, Moderna released its third-quarter earnings results, stating a 46% drop in total revenue compared to the previous year. Their net income for Q3 2022 was more than $1 billion, and in Q3 2023, it shifted to a net loss of $3.6 billion. They are also expecting approximately $4 billion in total revenue for 2024, and by 2026, they expect they will break even. Until then, avoid this and the other F-Rated stocks.
As of this writing, Noah Bolton 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.
