Some of the biggest tech plays threatening to tank amid ongoing volatility
- The Wall Street rout has been especially hard on tech stocks.
- Companies ranging from electric vehicles (EV) to fintech to e-commerce and more have all felt the pain of speculative investing winding down.
- As investors look for safer ways to grow their wealth, tech companies are bracing for the worst.
Speculative investments are caught between a rock and a hard place. Indeed, the cards have been stacking against more volatile buys in the last several months, with many investors preferring to cycle into more reliable — albeit slower — purchases. Commodities and bonds are on the up and up while crypto and tech stocks are getting caught in a downward spiral. And, as is the case with crypto, not all tech stocks are going to weather the storm. Instead, some companies will be devastated for quarters to come. Others will fold altogether. So, what are the best tech stocks to sell from your portfolio before they reach Code Red?
Many of the market’s top indices are continuing a steady downturn, brought on in large part by the heavy presence of tech stocks within them. There are many factors at play in this downturn as well. For instance, the Federal Reserve’s quantitative easing policies are proving less effective than originally thought. Now, the inflation crisis in America is turning into an inflation crisis worldwide, creating a feedback loop that gets louder and more disruptive to the global economy.
With all of these woes at hand, Americans are spending less. And the tech market — which is far less necessary than, say, commodities or pharmaceuticals — is bearing the brunt of these spending cuts. That has tech stocks experiencing continued earnings misses and bleak revenue outlooks as well.
Yes, it appears the dampers are on Big Tech. They aren’t expected to be lifted any time soon, either. That means lightening your portfolio is probably a bright idea. Consider these tech stocks to sell, which will be devastated for many quarters to come, if not worse.
- Alibaba (NYSE:BABA)
- JD.com (NASDAQ:JD)
- Baidu (NASDAQ:BIDU)
- Meta Platforms (NASDAQ:META)
- Coinbase (NASDAQ:COIN)
- Zoom Video Communications (NASDAQ:ZM)
- DocuSign (NASDAQ:DOCU)
- Snap (NYSE:SNAP)
- Robinhood (NASDAQ:HOOD)
- Nvidia (NASDAQ:NVDA)
- Advanced Micro Devices (NASDAQ:AMD)
- Intel (NASDAQ:INTC)
- QuantumScape (NYSE:QS)
- Peloton (NASDAQ:PTON)
- Mullen Automotive (NASDAQ:MULN)
- Stronghold Digital (NASDAQ:SDIG)
- Greenidge Generation (NASDAQ:GREE)
- Riot Blockchain (NASDAQ:RIOT)
- ContextLogic (NASDAQ:WISH)
- Stitch Fix (NASDAQ:SFIX)
- PayPal (NASDAQ:PYPL)
- Paysafe (NYSE:PSFE)
- Shopify (NYSE:SHOP)
- Affirm (NASDAQ:AFRM)
- Block (NYSE:SQ)
Alibaba, JD.com and Baidu
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Chinese tech stocks are in decline and they stand to suffer more on Wall Street than U.S. tech stocks. There are even factors beyond economic pressures that threaten these players, making them tech stocks to sell.
Indeed, these companies are suffering the worst of the tech rout, yet they do so with the added pressure of the relationship between the U.S. and China. In September, President Joe Biden threw some fuel on the fire after signing an executive order barring Chinese investment in U.S. tech entities. Another order signed shortly after banned the export of U.S. chip technology to China. That latter move comes amid fears that China will use these advanced technologies for military purposes.
Certainly, China won’t take this lying down, especially as President Xi Jinping sees election to his third term. President Xi Jinping has historically kept a tight grip on China’s tech players as well. Earlier this year, he showed a willingness to further scrutinize the presence of these companies in the States.
The bearish factor here isn’t to do with any single company’s model or earnings. Instead, it’s the fact that these companies can easily be yanked off Wall Street. Alibaba (NYSE:BABA), JD.com (NASDAQ:JD) and Baidu (NASDAQ:BIDU) — and many other Chinese tech stocks — utilize a loophole to exist on the U.S. market, creating shell companies called Variable Interest Entities (VIEs) to skirt China’s ban on foreign investment in its companies. As Joe Biden and Xi Jinping both respectively increase pressure on these entities, their existences teeter on a razor’s edge.
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Unlike some Chinese tech companies, Meta Platforms (NASDAQ:META) may not die exactly. But its business model does have some serious questions to address. The company’s pivot to the metaverse is proving costly — and not nearly as effective as Meta is willing to admit. With plans to continue this venture forward, though, one can expect META stock to remain on the skids for quarters to come.
CEO Mark Zuckerberg is making a large (and quite risky) bet on the metaverse taking off. The immersive digital space took off in popularity during the pandemic, with a grip of metaverse crypto projects surging in popularity. Meta Platforms had obviously taken notice, putting way more stock into its Reality Labs project as a result. Recently, Zuckerberg even reiterated his stance that the metaverse will become the future of work, with companies choosing to do their work over virtual reality (VR) instead of a physical office.
This isn’t great news for META stock holders, especially after Meta’s recent earnings report. The Reality Labs segment of the company has brought on $3.7 billion in lossesthrough the third quarter alone. Not to mention, Zuckerberg is fully expecting the company to continue bleeding for at least the next year, as he mentioned in his recent metaverse comments.
Right around the time of its Meta Platforms rebrand last year, this company was at its highest peak ever. Its market capitalization exceeded $1 trillion. But the shape of the company now as compared to then is night and day. META has shaved over $700 billion in value since its peak.
If you really believe in Zuckerberg’s metaverse vision, more power to you. But it seems that this tech giant may be flying much too close to the sun with its current venture.
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Coinbase (NASDAQ:COIN) is the first crypto exchange ever sold on Wall Street. But does being a first-ever really constitute holding COIN stock? There is evidence that Coinbase could eventually be forced to choose between the good of blockchain technology and its own shareholders — and both of the possible choices it could make are still bad overall. That makes Coinbase one of the tech stocks to sell right now.
Blockchain cybersecurity company CertiK recently wrote up a report on the Ethereum (ETH-USD) Merge — one of the biggest upgrades in the history of blockchain. The upgrade has displaced the power structure of the world’s largest layer-1 dapp network, taking the power from ETH miners and putting it in the hands of ETH stakers. As it so happens, Coinbase is easily one of the largest ETH stakers in the world, thanks to its staking program which stakes clients’ ETH for them and pays returns accordingly.
CertiK says this centralization of power could be a real problem for Ethereum. Coinbase and a handful of other exchange entities have major control of the network, which is a problem as the network starts censoring blocks to comply with U.S. Department of the Treasury regulations.
CEO Brian Armstrong has said he would shut down Coinbase staking entirely if asked by the U.S. government to censor transactions. However, it seems that the writing is on the wall given recent news. So, does the network shut down its uber-lucrative staking venture, which will certainly lead to a big hit on profitability? Or does it ruin its credibility in the crypto world by complying? Either choice will likely lead to a flight from the company’s services, resulting in another devastating hit. Get out of COIN stock now before Armstrong’s bearish Sophie’s choice.
Zoom and DocuSign
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Zoom (NASDAQ:ZM) and DocuSign(NASDAQ:DOCU) have maintained hero status for the last several years. When the pandemic touched down globally, these companies helped usher in remote work for millions. However, they are now both threatened as the world continues to ease Covid-19 policies. With more workers turning away from the home desktop and heading back into the office, ZM and DOCU stock are two tech stocks to sell.
Both of these companies have been around for a while. DocuSign has been in operation since 2003 and Zoom was founded in 2011, just as Big Tech was starting to take a serious look at video-based telecommunications. For reference, in 2011, Microsoft (NASDAQ:MSFT) had just bought Skype but was still six years away from its more robust Teams platform. Adobe (NASDAQ:ADBE), meanwhile, was just acquiring EchoSign to compete in the electronic agreements space. Nine years on, the two companies have won big as remote work became less of an option on the table for companies and more of a necessity to stay afloat.
In the first months of the pandemic, Zoom posted a 170% year-over-year (YOY) revenue increase. By the end of the first full quarter during the pandemic, it saw a YOY increase of more than 350%. The disaster couldn’t have been a better moment for the company, thrusting it upward in notoriety and making it a household name. In the meantime, DOCU stock saw a large uptick in price, topping out at over $300 in 2021.
The good times aren’t going to roll forever, however. The time when these platforms were most needed is in the rearview. Businesses are trying en masse to get employees into either hybrid work models or full returns to the office. Whether or not they prove successful is a different story for now. Still, ZM stock is down 55% year-to-date (YTD). DOCU is down 70% over the same period.
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Snap (NYSE:SNAP) has its place in the hierarchy of social media stocks, but it’s likely on the decline. A victim of the expedition of trend cycles, it looks like the stock’s once reliable users are pivoting toward other platforms. Meanwhile, the company’s own efforts to bring in new revenue streams have proven less than successful.
The company behind Snapchat has been desperately working to get away from its nearly full reliance on advertising dollars for revenue. This desire has been amplified even more as advertiser budgets continue to pare down. Snap has tried and failed over the years to put out successful hardware products, including three lines of camera-enabled glasses and a recently scrapped drone. However, all have underwhelmed investors.
These attempts to diversify come atop cost-cutting efforts like the closing of its San Francisco office. Indeed, the company appears to be on the skids. Even while the Snapchat app sees a continued growth of new users, the company acknowledges the challenges of competing with newer competitors like TikTok for advertisers.
SNAP stock has lost more than 78% of its value YTD. Its recent earnings report, though making good on revenue projections, preceded a 25% dip in the share price as Snap still voiced concerns for the future. Given its track record of product failures, one can expect Snap’s fourth attempt at glasses to bring similar results to its predecessors. Now seems like a fine time to cut your losses if you own SNAP stock.
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Robinhood (NASDAQ:HOOD) is a retail investor’s best friend — and a meme stock investor’s worst nightmare. But it is now facing some macro problems. For example, how will the retail trader-oriented platform fare as investors continue to leave amid a bear market? The company has already seen a volatile year, punctuated with its recent all-time bottom. That makes HOOD stock possibly one of the better tech stocks to sell before it faces further troubles.
This company may have revolutionized the way people buy and sell stocks, but that doesn’t mean Robinhood isn’t beholden to the market it provides access to. In fact, when the bear market rears its head, Robinhood’s user base is almost immediately directly affected. Users don’t want to trade, meaning the company misses out on the revenue it makes during bullish times. With the market turning vastly more unfavorable in 2022, the platform has lost nearly 7 million annual users.
This has certainly contributed to HOOD stock’s 35% price downturn since January. It has also fueled budget-cutting moves. Over the summer, the company laid off nearly a quarter of its staff after an exodus of users.
Robinhood has done well through a strong period of speculative investing, but there’s reason to believe the company’s revenue will stay on the decline for the foreseeable future. Some analysts predict another earnings miss on the horizon. Others remain firm in their skepticism.
Of course, the feelings aren’t shared across the investing world; Cathie Wood’s Ark Invest has a hefty position in HOOD stock. That said, a sizable caucus of options investors are still betting on the continued decline of the downtrodden stock.
Nvidia, AMD and Intel
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Supply-chain disruptions be damned, chipmakers really don’t deserve the beatdown they’ve taken in recent months. Chip fabrication slowdowns worldwide have hampered the business models of these companies greatly. Plus, even as the CHIPS Act stimulates growth for the chipmaker industry, these three companies will lose out on an ally in China, which could prove quite costly. These chip giants could be down and out for a long while, making them tech stocks to sell if you’re trying to taper.
The Biden administration is cracking down on the relationship between U.S. chipmakers and China. In September, Biden signed an executive order barring Chinese investment in U.S. tech. In October, another order barred chipmakers from exporting chips to China. These moves come amid an escalating “tech war” between the two countries, which are both greatly interested in the applications of advanced chip technologies.
Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) are directly hurt by this news; Nvidia says it expects to take a hit of up to $400 million as a result of the ban. If the relationship between the two countries sours further, too, there could be more robust bans in the future.
Meanwhile, Intel (NASDAQ:INTC) is stuck between a rock and a hard place. The most surefire contender for CHIPS Act funding, Intel will need to pull out of all plansto fabricate chips in China if it wants government subsidies. While the money is sweet, the company has to abandon a very sizable market in order to receive it. Nvidia and AMD, which outsource their own chip manufacturing to China, are in an even greater bind as geopolitical woes play out. This all adds up to make these chip names some solid tech stocks to sell.
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QuantumScape (NYSE:QS) is an electric vehicle (EV) battery maker that has shown some promise; investors flocked to QS stock after its initial public offering (IPO) in 2020. However, investors are now easing off the EV market and, as it stands, QuantumScape might be simply too risky to justify holding onto shares.
This company is a leader in solid-state battery technology, a buzz phrase that has managed to drum up plenty of hype. Compared to lithium-ion batteries — the standard for EVs nowadays — solid-state batteries can be much safer. Specifically, they are not prone to the infamous explosion concerns lithium-ion batteries have carried with them over the years.
But, while a promising technology, solid-state batteries are still years away from wide-scale production. They have several cons which make them unfavorable for broad adoption as well — mainly their inability to hold a charge in cold weather. Moreover, supply-chain woes have made it a tall task to reliably come across the raw materials needed for production. QuantumScape is only making these challenges even harder on itself as it develops its own batteries from the ground up, refusing to produce solid-state batteries designed outside of its facilities.
This business model makes the company’s future very uncertain. As it stands now, QS is spending a lot of its secured capital. That may not worry some, but these investors are banking on the company finding funding in the next couple of years. Sure, that’s not an impossible task. However, the EV market is suffering some of the hardest blows during this ongoing bear market and investors are piling out of EV investments. If things stay on their current trajectory, it will take a very brazen investor to inject this struggling company with the cash needed to simply reach production.
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Another success story of the pandemic, Peloton (NASDAQ:PTON) has been able to easily cash in as a gym alternative. The company remains in the spotlight as one of the best home exercise options to this day. However, PTON stock is still certainly hurting, thanks to a plague of other road blockages.
The shuttering of gym doors in early 2020 made for great success at Peloton. Relegated to working out at home, people began to flock to the company’s subscription-based exercise programs and exercise machines. This helped Peloton double profits from Q1 2020 to Q2 2020. That growth continued through 2021 as well; the company posted a record high $1.2 billion in revenue in Q3 2021.
However, even as subscriptions grow, Peloton is now reckoning with a downturn in revenue. For several quarters now, the company has reported far larger losses-per-share than analysts have projected. In Q2 2022, it lost a whopping $1.32 per share, far greater than the expected 71 cent loss. If that’s not evidence enough that Peloton is struggling, there’s also the 500 employees fired over the course of 2022.
To be clear, Peloton is doing quite well at bringing in new subscribers. However, with less people buying its expensive equipment, the company finds itself in a deepening hole. Never mind all the controversies which seem to follow the company everywhere and make things even harder. Down more than 70% YTD, don’t expect an epic comeback for PTON stock soon. It’s certainly one of the tech stocks to sell.
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Mullen Automotive (NASDAQ:MULN) is a meme stock favorite right now and die-hard fans will jump to defend it. MULN stock is cheap and the company shows a bit of promise. However, there are too many factors acting against Mullen which make it one of the tech stocks to sell.
Sure, the last month has been easygoing for the EV maker. But its gains over the last month are paltry in comparison to MULN stock’s 93% downside YTD. Plus, as InvestorPlace analyst Louis Navellier points out, analysts see only limited upside for shares as Mullen moves into production stage after positive initial pre-orders.
Other news meant to help catalyze gains has been unsuccessful as well. Earlier in October, for example, Mullen put out a bid on Electric Last Mile Solutions. The $92 million offer, which included the company’s Indiana plant, preceded a new low for MULN stock. Navellier predicts that this hefty offer, which came just after another acquisition worth $148 million, could lead to the company needing more funding sooner than later.
Other analysts focus less on the short- and medium-term and more on the long-term when it comes to Mullen. But the picture doesn’t seem much prettier. For one, analysts are skeptical whether Mullen’s solid-state batteries will be as revolutionary or effective as the company asserts. Published earlier this year, Hindenburg Research’s scathing deep-dive into Mullen also suggests the company is misleading investors on several fronts. Of course, you could take a bet on Mullen shaping up like Tesla (NASDAQ:TSLA), but it seems more likely to turn out like Nikola(NASDAQ:NKLA).
Stronghold Digital, Greenidge Generation and Riot Blockchain
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Like Coinbase, these crypto mining stocks — and many others — are flashy buys because they’re so unique. Before the crypto boom, they didn’t even exist. Only after crypto prices ballooned in the last few years did crypto mining stocks become immediately hyper-competitive. But, as is also the case with Coinbase, investing in something unique doesn’t necessarily mean investing in something sound. Current market conditions for crypto don’t exactly make these stocks appealing, either.
First off, crypto miners are almost entirely going after Bitcoin (BTC-USD). This in itself will lead to long-term problems. Of the 21 million total BTC able to exist, there is only 1.8 million — or about 10% — left to mine. Of course, it will take decades before miners are able to do so. However, thanks to Bitcoin halving, the miners who secure each block will receive increasingly smaller rewards as time goes on. Seeing as more and more of these companies are cropping up and individuals host their own Bitcoin mines, the odds of receiving consistent block rewards are getting smaller as well.
Bitcoin prices are a major factor at play here, too. Mining was much more lucrative last fall, when BTC prices were at an all-time high. Since October 2021, though, the mining market’s revenue stream has been shrinking thanks to the market crash dragging BTC prices down.
This is just one of many issues facing crypto miners; there’s also the adversity they face by way of lawmaker scrutiny and revoked environmental permissions. Simply put, there’s a laundry list of factors pointing to a tumultuous future for these stocks. With prices already in steady decline, it’s best to shed these tech stocks to sell from your portfolio.
ContextLogic, Stitch Fix
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E-commerce was one of the best bets one could’ve made in 2020. Who knew that online retail therapy was going to be a necessity to keep so many people sane as they stayed indoors? Already a fast-growing market thanks to the ongoing successes and expansion of giants like Amazon (NASDAQ:AMZN), e-commerce exploded during the pandemic. However, investors have to reckon with these cyclical stocks falling to the backburner, where they’re likely to stay for a while. Frankly, consider almost any e-commerce name besides Amazon as one of the tech stocks to sell.
Indeed, the same macro factors playing against many of the stocks on this list are hampering ContextLogic (NASDAQ:WISH) and Stitch Fix (NASDAQ:SFIX). But these aren’t just tech stocks to sell because consumers are buying less accessories. Both of these companies have also been navigating rough waters for a while. The bear market could very well just make things worse.
Many of the analysts at InvestorPlace have already been abundantly clear that WISH stock isn’t a buy. Since its late 2020 IPO, WISH hasn’t been very profitable at all. In fact, the share price has remained largely on the decline since touching the $30 mark in January 2021. For Q2 2022, the company reported revenue of just $134 million, an 80% YOY decline. Analysts don’t predict much better ahead of the company’s Q3 earnings call on Nov. 9.
Stitch Fix is in a similarly stressful situation. The stock is down 80% YTD, taking an absolute beating as a result of the massive pivot away from speculative investing. Sure, it remains more profitable than ContextLogic, posting $482 million in revenue last quarter. But that was still a 16% YOY decline. As is the case with WISH stock, analysts also expect this tumult to continue for several consecutive quarters at best.
PayPal, Paysafe and Shopify
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Financial technology companies PayPal(NASDAQ:PYPL) and Shopify(NYSE:SHOP) remain leaders in this promising niche while Paysafe(NYSE:PSFE) paves its own way. However, the entire fintech market has been in decay throughout 2022, so you can expect this trio to fare poorly, especially as they start to revise their projected earnings.
As is the case with other tech players, fintech companies became a favorite investment during an up period for more volatile investments in 2020. These companies process a huge amount of the world’s e-commerce, too. That means that, like Stitch Fix and ContextLogic, they were big beneficiaries of the online shopping boom of the pandemic.
Now, though, slowed consumer spending and market volatility — brought on by the Federal Reserve’s stringent policies — are eating these companies alive. Many are slashing expectations and PayPal, Paysafe and Shopify are each down 58%, 65% and 75% YTD. That makes them three good tech stocks to sell from your portfolio.
Affirm and Block
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Of course, if payment processing companies like those above are getting hit hard, so too are Buy Now, Pay Later (BNPL) stocks like Affirm (NASDAQ:AFRM) and Block(NYSE:SQ). Atop unfavorable market conditions, these tech stocks to sell are facing increased regulatory scrutiny.
E-commerce’s rise in popularity, coupled with many Americans being strapped for cash due to furloughs and layoffs, allowed the BNPL concept to take off. The nascent payments plan option exploded in 2022, especially among younger shoppers. Analysts have also made bold projections for the industry, expecting the BNPL market to reach nearly $47 billion in value by 2031.
The excitement of the model’s success has led to investors flocking toward BNPL stocks. It has also led to fintech companies like Block pivoting hard into BNPL; the company spent $14 billion to acquire Afterpay in 2021. But this success also attracted the attention of the government.
These BNPL services are convenient, but they also encourage consumers to spend more than their financial situations may be able to accommodate. As such, they have been framed as predatory, especially toward younger buyers who may not fully understand the implications of BNPL.
Last year, the Consumer Financial Protection Bureau (CFPB) launched a probe into BNPL services and explored the risks facing consumers. At the time, this led to a dip for BNPL stocks. But now as of September, the CFPB has opened another probe into these companies.
Both probes have brought on slumps for these stocks and, compounded with the Fed’s policies slowing down consumer spending, AFRM stock and SQ stock are respectively down 80% and 65% YTD. All told, with regulators threatening to crack down on this financial niche and consumer spending unlikely to boom anytime soon, BNPL stocks could be out of favor for a while.