Rising recession fears with the Fed continuously raising interest rates have kept the stock market under pressure over the past several months. Despite the Fed’s hawkish stance, inflation has persistently hovered around the multi-decade high level.
The stubborn inflation led to the Fed hiking the benchmark interest rate by 75 basis points last month for the third consecutive time. However, September’s consumer price index (CPI) rose 0.4% sequentially, beating economists’ estimates. So, the market expects the central bank to announce another aggressive rate hike in its next meeting. This is expected to keep the stock market under pressure in the upcoming months.
The overall risk-off environment has weighed on investors’ sentiment. Many investors have been shorting stocks to capitalize on the stock market’s downtrend.
Meme stocks Rivian Automotive, Inc. (RIVN), Lucid Group, Inc. (LCID), Teladoc Health, Inc. (TDOC), Warby Parker Inc. (WRBY), and Virgin Galactic Holdings, Inc. (SPCE) have been heavily shorted by investors. Since these stocks don’t have enough fundamental strength to rebound anytime soon, investors looking to bottom fish should stay away from them.
Rivian Automotive, Inc. (RIVN)
RIVN designs, develops, and manufactures electric vehicles (EVs) and sells them directly to consumer and commercial markets. The company’s services include digitally enabled financing, telematics-based insurance, proactive vehicle membership and software services, charging solutions, a data-driven vehicle resale program, and FleetOS, a centralized fleet management subscription platform.
RIVN’s total operating expenses increased 73.1% year-over-year to $1 billion for the second quarter ended June 30, 2022. The company’s loss from operations widened 194.5% year-over-year to $1.71 billion.
Its adjusted net loss widened 153.1% year-over-year to $1.47 billion. Also, its adjusted EBITDA loss widened 133.4% year-over-year to $1.30 billion. In addition, its adjusted loss per share came in at $1.62, compared to $5.75 in the year-ago period.
Analysts expect RIVN’s EPS for the quarter ended September 30, 2022, to remain negative. Its EPS is expected to decline 31.6% per annum over the next five years. The stock has fallen 70.4% year-to-date to close the last trading session at $30.70.
RIVN’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F grade for Value, Stability, and Quality and a D for Sentiment. It is ranked #62 out of 64 stocks in the D-rated Auto & Vehicle Manufacturers industry. Click here to see the other ratings of RIVN for Growth and Momentum.
Lucid Group, Inc. (LCID)
LCID is a technology and automotive company that develops electric vehicle (EV) technologies. It designs, engineers, and builds electric vehicles, EV powertrains, and battery systems.
LCID’s loss from operations widened 124.6% year-over-year to $559.20 million for the second quarter ended June 30, 2022. Its total costs and expenses increased 163.6% year-over-year to $656.53 million.
The company’s net loss narrowed 15.8% year-over-year to $220.42 million. Its loss per share narrowed 95.4% year-over-year to $0.33. Also, its adjusted EBITDA loss widened 89.9% year-over-year to $414.08 million.
For the quarter ended September 30, 2022, LCID’s EPS is expected to remain negative. Its EPS is expected to decline 69.4% per annum over the next five years. It failed to surpass Street EPS estimates in three of the trailing four quarters. The stock has declined 70.6% over the past nine months to close the last trading session at $12.41.
LCID’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Value, Stability, and Quality. It is ranked #57 in the Auto & Vehicle Manufacturers industry. To see the other ratings of LCID for Growth, Momentum, and Sentiment, click here.
Teladoc Health, Inc. (TDOC)
TDOC provides healthcare services. The company operates in the health services segment. The company provides virtual access to care with a portfolio of services and solutions, which includes various medical subspecialties.
For the fiscal second quarter ended June 30, 2022, TDOC’s adjusted EBITDA declined 30.1% year-over-year to $46.71 million. Its net loss increased significantly from the prior-year period to $3.10 billion. In addition, its net loss per share increased significantly from the prior-year quarter to $19.22.
Analysts expect TDOC’s EPS for the quarter ended September 30, 2022, to remain negative. Over the past year, the stock has declined 81.8% to close the last trading session at $24.63.
TDOC’s weak prospects are reflected in its POWR Ratings. The stock has an overall rating of D, equating to a Sell in our proprietary rating system.
It has an F grade for Sentiment and a D for Stability and Quality. It is ranked #75 out of 79 stocks in the Medical – Services industry. Click here to see the other ratings of TDOC for Growth, Value, and Sentiment.
Warby Parker Inc. (WRBY)
WRBY provides eyewear products. It offers eyeglasses, sunglasses, light-responsive lenses, blue-light-filtering lenses, contact lenses, and accessories. The company runs 160 retail stores in the United States and Canada.
For the fiscal second quarter ended June 30, 2022, WRBY’s adjusted selling, general, and administrative expenses increased 22.3% year-over-year to $88.52 million.
The company’s adjusted net loss came in at $1.39 million, compared to an adjusted net income of $3.68 million in the year-ago period. Its adjusted loss per share came in at $0.01. In addition, its adjusted EBITDA fell 45% year-over-year to $5.93 million.
For the quarter ended September 30, 2022, WRBY’s EPS is expected to decline 66.7% year-over-year to $0.01. Over the past year, the stock has declined 72.2% to close the last trading session at $15.20.
WRBY’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Value and a D for Stability and Quality. Within the D-rated Medical - Devices & Equipment industry, it is ranked #142 out of 145 stocks. To see the other ratings of WRBY for Growth, Momentum, and Sentiment, click here.
Virgin Galactic Holdings, Inc. (SPCE)
Headquartered in Las Cruces, New Mexico, SPCE is an aerospace company focused on developing, manufacturing, and operating spaceships and related technologies to conduct commercial human spaceflight and fly commercial research and development payloads into space.
SPCE’s revenue declined 37.4% year-over-year to $357K for the second quarter that ended June 30, 2022. The company’s operating expenses increased 47.8% year-over-year to $110.07 million. Its operating loss widened 48.4% year-over-year to $109.72 million. Also, its net loss widened 17.7% year-over-year to $110.72 million.
Analysts expect SPCE’s EPS for the quarter that ended September 30, 2022, to remain negative. Its revenue for the quarter ended September 30, 2022, is expected to decline 95.4% year-over-year to $117.44K. Over the past year, the stock has declined 72.2% to close the last trading session at $4.74.
SPCE’s weak prospects are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It has an F grade for Growth, Stability, and Sentiment and a D for Value and Quality. It is ranked last out of 31 stocks in the D-rated Airlines industry. Click here to see SPCE’s rating for Momentum.
RIVN shares were trading at $31.31 per share on Tuesday afternoon, up $0.61 (+1.99%). Year-to-date, RIVN has declined -69.80%, versus a -21.35% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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