Investors may want to start clearing out the junk as we head into New Year 2024. In fact, if the stocks listed below are held, consider selling them. If not, be warned. Many of the names on this list of stocks to avoid aren’t worth buying.
Stocks to Avoid: Coinbase (COIN)
Coinbase (NASDAQ:COIN) has a well-known brand, offers easy access to crypto markets, and has provided very strong returns to investors in 2023. Despite that, the stock is a sell.
Fundamentally, Coinbase is heading in the wrong direction. Consumer and institutional trading volumes fell precipitously at Coinbase in the second quarter. That led to a large decline, roughly 50%, in transaction revenue for Coinbase. The firm made up some of the difference with interest income but it wasn’t enough, and revenues suffered a 17% decline. Those are just simple facts but they’re powerful nonetheless.
Beyond that, Coinbase is also facing a lawsuit from the US Securities and Exchange Commission (SEC). That lawsuit will argue whether cryptos are securities as the SEC digs in its heels and attempts to bring crypto under its purview. The lawsuit is only going to serve to hold prices lower as it looms like a black cloud sowing doubt about crypto’s position. Additionally, Coinbase continues to lose a lot of money, more than $97 million in Q2.
AMC (NYSE:AMC) is and has been a dangerous stock to invest in. The company continuously attempts to market the silver lining in what has consistently been a gray cloud. Recently, that’s materialized as a push to impress investors that Taylor Swift’s Era’s Tour film could be its savior. It’s clear that concert movies like her’s and Beyonce’s have a broad appeal that sells. However, AMC isn’t going to right its ship on either or both.
It is simply too far gone. The firm and its stock have been trading on borrowed time for a while. Back in April, Moody’s downgraded AMC’s credit rating to ‘junk’. AMC posted a net loss of $186 million in H1. Somehow, the company wants investors to believe that it is stronger than the seismic shifts affecting its business. It isn’t. Streaming and other factors are simply too powerful.
AMC’s debt is rising and the company has diluted its stock as well. Don’t get caught chasing its supposed strengths.
Stocks to Avoid: United Airlines (UAL)
United Airlines (NASDAQ:UAL) perfectly exemplifies one of the biggest issues affecting airline stocks: profitability. Margins are generally tight even in the best of times. Analysts keep a keen eye trained on earnings in particular. It serves as a barometer of overall health which is exactly why UAL shares are headed down for the next few weeks.
While United Airlines showed strong results on booming Atlantic and Pacific travel in Q3, it’s the fourth quarter outlook that has investors worried. United offered weak guidance that is roughly $0.30 to $0.60 below the $2.09 analysts had in mind.
The news is troublesome for the entire industry and factors in externalities that could not have been anticipated. The conflict in Israel and Palestine is taking its toll as Tel Aviv flights are being affected. Rising fuel costs factor in as well. The result is that airline stocks again appear troubled which follows a strong period of surging, pent-up travel demand.
Mullen (NASDAQ:MULN) stock is truly circling the drain. For the past few months the company has been fighting to simply keep its shares listed on the Nasdaq. That’s a crystal clear sign that the firm is in deep trouble and very dangerous for investors overall.
The thrust of news is entirely up to one’s interpretation. It’s positive in that Mullen may be able to ward off an imminent delisting by bringing its case before the panel. Yet, it’s also a screaming indication of how bad things have gotten.
In any case, Mullen just diluted the value of its shares again by filing a preliminary proxy statement of a reverse stock split. It’s a textbook example of how to further erode shareholder value when trying to do the opposite.
Stocks to Avoid: Beyond Meat (BYND)
Beyond Meat’s (NASDAQ:BYND) products have not lived up to the hype. The simple truth is that consumers aren’t going to replace beef burgers with plant-based burgers.
That’s the narrative you have to pull from Beyond Meat’s Q2 earnings report. Sales fell 30.5% to $102.1 million during the period. That led to a $53.5 million net loss. Optimistic investors can build a narrative that favors those fundamentals but it wouldn’t be wise. In the earnings report, Beyond Meat characterized the slowdown as reflective of ‘weak category demand’. Again, plant-based meat simply hasn’t lived up to the hype.
My take remains the same: Plants are delicious and so is meat. Trying to make plants into meat simply doesn’t work. It lacks mass appeal and more importantly, the business model produces steep losses on a sustained basis. BYND shares dipped below $10 in early September and are headed toward $6. Stay away.
KeyCorp (NYSE:KEY) sings a siren song with a dividend yielding 8.1%. Bank stocks are considered stable generally notwithstanding trouble earlier this year. And a high-yield dividend makes KEY shares appear to be a slam dunk at first glance.
Upon further inspection, the truth becomes clearer. The yield is as high as it is because share prices have fallen so dramatically. Those prices have fallen because income has more than halved at the bank in 2023. That has pushed prices from $18 to $10. Meanwhile, dividend payouts have remained at $0.205 per quarter pushing yields higher due to their calculation method.
Regional banks were deeply shaken earlier in the year. Investors are still trying to figure out what to make of them late in 2023. I can’t say I have a clear answer but intuition tells me that KeyCorp is in trouble and that its dividend will only draw investors in and ultimately hurt them.
Stocks to Avoid: GameStop (GME)
It feels like the tide has turned on GameStop (NYSE:GME). Even the appointment of Ryan Cohen hasn’t changed overall negative sentiment surrounding the firm. His appointment hasn’t had the effect intended and shares have continued to fall.
The company’s push into eCommerce, at Cohen’s behest as a major shareholder, has fallen flat. The company burned through a series of high-profile eCommerce executives who failed to stanch the bleeding. Now GameStop is back to square one: Traditional disc-based game sales combined with steep cost-cutting measures as GameStop enacts the strategy it abandoned not long ago. No one viewing GameStop believes that the company is now in a better place than it was at any point in the last few years.
There’s not much hope left logically. Digital downloads dominate the gaming industry. GameStop couldn’t adapt successfully. It tried to branch out into hot topics including NFTs to no avail. Nothing has helped and it’s back to square one only with the additional problems it’s picked up in the interim.
On the date of publication, Alex Sirois did not have (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.