The Federal Reserve recently announced its third consecutive 75-basis-point hike to bring down inflation, which is hovering around its highest levels since the 1980s. As the Fed might deliver more jumbo-size rate hikes this year, the odds of a recession are increasing.
The major market indices have suffered massive losses with dampened investors’ sentiments. The S&P 500 index has declined nearly 22% year-to-date, while the Nasdaq Composite fell more than 29% over this period. Moreover, according to experts, stock market losses wiped out more than $9 trillion from Americans’ wealth at the end of the second quarter, and the losses could increase further.
According to Steve Hanke, former Reagan economist and hyperinflation expert, the recession odds have shot up to 80%. Also, economist Nouriel Roubini expects a “long and ugly” recession by the end of this year and a sharp correction in the S&P 500.
Given the increased market uncertainties, popular but fundamentally weak stocks Lucid Group, Inc. (LCID), Bed Bath & Beyond Inc. (BBBY), and fuboTV Inc. (FUBO) could be best avoided now.
Lucid Group, Inc. (LCID)
LCID is a technology and automotive company that designs, builds, and sells electric vehicles (EVs), powertrains, and battery systems. The company sells its products at its own geographically distributed retail and service locations and through direct-to-consumer online and retail sales. It operates more than 20 retail studios in the United States.
In June, LCID entered into a Credit Agreement with Bank of America Corp. (BAC) as the transaction's administrative agent and Swingline lender. The revolving credit facility will provide an initial committed amount of up to $1 billion and has a five-year term, maturing on June 9, 2027. The credit facility is expected to increase the company’s loan and interest.
LCID's total cost and expenses increased 163.6% year-over-year to $656.54 million in the fiscal 2022 second quarter ended June 30, 2022. Its loss from operations worsened 124.7% from the prior-year period to $559.20 million. The company’s net loss and loss per share attributable to common stockholders amounted to $220.43 million and $0.33, respectively.
Furthermore, the company’s cash outflows from operating activities and investing activities stood at $513.63 million and $1.73 billion, up 118.5% and 1,447.5% year-over-year, respectively.
The company’s loss per share for the fiscal 2022 third quarter (ending September 2022) is expected to come in at $0.30. In addition, analysts expect LCID's loss per share for the current year (ending December 2022) to widen 33.7% from the previous year to $1.13. It’s no surprise that the company has failed to surpass the consensus revenue estimates in three of the trailing four quarters.
Shares of LCID have declined 40% over the past six months and 62.8% year-to-date to close the last trading session at $15.22.
LCID’s POWR Ratings are consistent with this bleak outlook. The company's overall F rating translates to Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
LCID also has a grade of F for Value, Quality, and Stability. Within the D-rated Auto & Vehicle Manufacturers industry, it is ranked #53 of 64 stocks. To see LCID's POWR Ratings for Sentiment, Growth, and Momentum, click here.
Bed Bath & Beyond Inc. (BBBY)
BBBY operates a chain of retail stores. The company sells a range of domestic merchandise, home furnishings, and other juvenile products. The company owns more than 953 stores and offers its products through various websites and applications comprising bedbathandbeyond.com, bedbathandbeyond.ca, facevalues.com, buybuybaby.ca, and decorist.com.
BBBY’s fiscal 2022 first-quarter results were adversely affected by the ongoing macroeconomic headwinds. The company's Interim CEO, Sue Gove, stated, “In the quarter, there was an acute shift in customer sentiment, and since then, pressures have materially escalated. This includes steep inflation and fluctuations in purchasing patterns, leading to significant dislocation in our sales and inventory.”
For the fiscal 2023 first quarter ended May 28, 2022, BBBY’s net sales decreased 25.1% year-over-year to $1.46 billion, and its gross profit declined 44.9% from the year-ago value to $349.31 million. Its operating loss widened 371.9% year-over-year to $339.16 million. Its adjusted EBITDA loss stood at $223.54 million, compared to an $86.07 million gain reported in the prior-year period.
In addition, the company's net loss and loss per share came in at $357.67 million and $4.49, widening 603% and 835.4%, respectively, year-over-year.
The company's revenue for the fiscal year 2023 (ending February 2023) is expected to decline 22.5% from the last year to $6.09 billion. Also, analysts expect its loss per share for the ongoing year to worsen by 536.4% year-over-year to $6.87. The company has missed the consensus revenue estimates in each of the trailing four quarters, which is disappointing.
BBBY’s stock has plunged 41.3% over the past month and 57.4% year-to-date to close the last trading session at $6.46.
BBBY’s weak fundamentals are reflected in its POWR Ratings. The stock's overall D rating translates to a Sell in our proprietary rating system.
BBBY has an F grade for Stability and Sentiment. The stock has a D grade for Growth and Quality. Within the Home Improvement & Goods industry, it is ranked #58 of 62 stocks. To see additional POWR Ratings (Momentum and Value) for BBBY, click here.
fuboTV Inc. (FUBO)
FUBO is a TV streaming company. The company offers subscribers access to live sports, news, and entertainment content. It operates through two segments: streaming; and online wagering. Its fuboTV platform enables customers to access content through streaming devices like smart TVs, mobile phones, tablets, and computers.
The streaming company has reduced its North America (NA) segments’ revenue and subscribers’ guidance for fiscal 2022. FUBO now expects its revenue for the NA segment to come in between $910 million and $930 million, down from $1,020-$1,030 million, while its subscribers are expected to come in the range of 1,330-1,350K, down from 1,465-1,485K guided at the end of the first quarter.
FUBO’s operating expenses increased 57.8% year-over-year to $334.42 million for the fiscal 2022 second quarter ended June 30, 2022. Its operating loss widened 38.8% year-over-year to $112.52 million. The company’s adjusted EBITDA loss widened 67% year-over-year to $79.11 million.
In addition, FUBO’s adjusted net loss widened 60.7% year-over-year to $82.51 million. Its adjusted loss per share came in at $0.45, worsening 21.6% year-over-year. The company’s total liabilities stood at $760.19 million as of June 30, 2022.
Analysts expect FUBO’s loss per share for the fiscal 2022 third quarter (ending September 2022) to widen 9.4% year-over-year to $0.65. The current year's $2.53 consensus EPS estimate indicates a widening of 29% from the previous year. In addition, its loss per share for the next year is expected to come in at $1.86.
The stock has declined 44.1% over the past six months and 83.4% over the past year to close the last trading session at $3.96.
FUBO's poor prospects are apparent in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
FUBO has a grade of F for Stability and Quality. It has a D grade for Momentum and Sentiment. FUBO is ranked last in the 16-stock F-rated Entertainment - Sports & Theme Parks industry.
Beyond what I have stated above, we have also given FUBO grades for Value and Growth. Get all FUBO ratings here.
LCID shares fell $15.22 (-100.00%) in premarket trading Thursday. Year-to-date, LCID has declined -60.58%, versus a -22.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
Expect More Pain Ahead for These 3 Popular Stocks StockNews.com
