As Washington’s fiscal and monetary stimulus has wound down, meme stocks and cryptocurrencies are tumbling tremendously. Consequently, any names connected to either phenomenon are good growth stocks to sell.
Retail investors’ confidence in both cryptos and meme stocks have been completely eroded.
Another factor dealing a huge blow to meme stocks was the pump-and-dump, “stinking maneuver” executed with Bed, Bath and Beyond (NASDAQ:BBBY) stock by GameStop (NYSE:GME) Chairman Ryan Cohen. His actions showed that one of the meme investors’ heroes obviously doesn’t believe in the “apes'” power; that had to be really demoralizing for them.
On the crypto front, the currencies have plunged, and many crypto firms have either gone under or have had to be bailed out.
Cryptos have recently had more of their own confidence-killing episodes. The Merge of Ethereum (ETH-USD), which was (somehow, for reasons I never really understood) supposed to push the value of Ethereum and cryptos higher, seems to actually be pulling them in the opposite direction.
Bed, Bath and Beyond
Source: WindAwake / Shutterstock
The leading crypto trading platform has many problems. Despite its recent rebound, Bitcoin (BTC-USD) is trading well under $20,000 and has sunk about 20% in the last month alone.
Man other major cryptos have performed similarly in recent weeks. With the Fed doubling its quantitative tightening program this month, their value is likely to sink much further in the coming weeks.
As I alluded to earlier, the SEC is probing two parts of the company’s operations: its “staking” offerings, which allow investors to earn a yield on cryptos, and the trading in tokens that it enables. Given the government’s animosity to cryptos, the probes are worrisome for COIN.
Meanwhile, on at least two days earlier this month, COIN’s customers had difficulties withdrawing their funds. The problems may have been caused by technical issues.
Still, given the crypto sector’s financial issues and the firm’s legal entanglements, I would be very worried about withdrawal issues if I was long COIN stock (I’m actually shorting it). That’s because the difficulties may indicate that the company has tremendous liquidity and/or legal issues, making it one of the crypto growth stocks to sell.
Bed, Bath & Beyond (BBBY)
Ryan Cohen’s decision to quickly sell his entire stake in BBBY and all of his call options on the shares, after releasing an SEC document that caused the stock to jump, was an ominous sign for the shares’ outlook. It didn’t take long at all for the bad news to arrive for the retailer’s shareholders.
The company announced that its comparable sales had tumbled roughly 26% in the second quarter, while it burned $325 million of cash during the period. Moreover, BBBY stated that it would prepare to sell 12 million new shares of BBBY stock, diluting current shareholders.
Most ominously for the stock’s owners, the company has hired a law firm that employs attorneys who are considered to be “restructuring experts.” Based on my experience as a business news writer and columnist, when a company hires a law firm that’s an expert in “restructuring,” there’s a good chance that bankruptcy is not very far away.
If that doesn’t qualify it as one of the growth stocks to sell as soon as you can, I don’t know what does.
I felt that way because the company was facing depressed box office sales compared to pre-pandemic levels, the tremendous weakening of meme-stock investors, and a huge mountain of debt along with an excessive valuation.
In recent weeks, the dismal truth has emerged, as AMC reported that it had used $117 million in cash last quarter as the elevated interest on its debt weighed on its bottom line.
In another ominous sign for AMC, one of the company’s competitors stated that it may have to declare bankruptcy.
And finally, in its own stinking maneuver, AMC unveiled preferred shares using a special dividend.
Seemingly designed to lure in poorly informed “apes,” the jargon was meaningless, as the preferred shares are basically identical to the company’s common stock in every way except their names. Issuing the preferred shares also enabled the company to comply with a promise not to sell any more shares of AMC stock.
With AMC facing major financial problems, operating in a broken sector, and having to resort to what some would consider deception, it’s clearly one of the growth stocks to sell in the entertainment space.
Source: Wirestock Creators / Shutterstock.com
I thought that Ocugen (NASDAQ:OCGN) might finally have generated some revenue last quarter. In April, the company announced that it had obtained the right to sell Covaxin –a coronavirus vaccine developed by Indian company Bharat Biotech — in Mexico.
Unlike in Canada and the U.S. Mexico has actually approved the shot.
However, Ocugen still did not generate any sales from the shot last quarter or any revenue at all.
Meanwhile, Ocugen is trying to impress its beleaguered investors by touting two of its other drugs — NeoCart and OCU400.
NeoCart appears to be the same biologic that “failed to meet the primary endpoint of [a] Phase III trial” back in 2018, making it unlikely to succeed in its second try. OCU400, a potential treatment for a rare eye disease called retinitis pigmentosa, is still in Phase 1 trials. As a result, even in the best-case scenario, it is many years away from ever generating revenue for the company.
Nor, at this very late stage of the pandemic, are the U.S. or Canada likely to ever approve Covaxin.,
Given these points, OCGN stock, with its market capitalization of $509 million, remains drastically overvalued.
Source: chrisdorney / Shutterstock
Although Disney (NYSE:DIS) is not considered a meme stock, I believe that it shares some important characteristics with meme stocks. Specifically, even though the company’s business model has serious deficiencies, a high number of retail investors passionately believe in DIS stock.
Disney’s movie business is badly damaged. At the same time, its cable-channel business is being significantly hurt by the ongoing cord-cutting phenomenon, and it’s still losing money on its streaming channels, making it one of the growth stocks to sell as people move away from cable.
The conglomerate’s current CEO, Bob Chapek, has adopted a strategy of steadily increasing the cost of subscribing to its streaming channels.
Given Netflix’s (NASDAQ:NFLX) recent decision to launch a significantly cheaper, ad-supported streaming channel, I believe that Chapek’s strategy is doomed to fail. That’s because, if he continues increasing the subscription prices of Disney’s streaming channels, the company will lose too many subscribers to Netflix’s much cheaper offering.
Source: DCStockPhotography / Shutterstock.com
MicroStrategy (NASDAQ:MSTR) appears to have bet its entire future on Bitcoin. As of June 29, the company had “spent $3.98 billion” on the cryptocurrency, while the stock’s market capitalization is only $2.47 billion. It paid an average price of $30,6664 per Bitcoin as of June, well above the crypto’s current price of $19,300.
Unsurprisingly, MSTR stock has tumbled along with Bitcoin, making it another of the crypto growth stocks to sell. Specifically, the company’s shares have sunk 35% in the last month and 60% so far in 2022.
I would not be at all surprised if the U.S. government strikes multiple blows against cryptos in general and Bitcoin in particular in the coming months and years.
Despite all of these issues, MSTR stock still has a market capitalization of $2.3 billion.
Mullen Automotive (MULN)
Source: Ringo Chiu / Shutterstock
Surprisingly, Mullen did manage to obtain a sizeable order for its EVs from an Amazon (NASDAQ:AMZN) delivery partner, DelPack Logistics.
However, the details included in the press release, along with Mullen’s history and background, make me skeptical about whether the company can execute.
First, the press release states that DelPack will purchase up to 600 Mullen Class 2 EV cargo vans over the next 18 months. Of course, “up to” is the key part of that sentence: DelPack may be able to fulfill the deal by buying three of the EVs, for example.
My research suggests that Mullen only began focusing on its cargo vans at the end of last year, while in the past several months the company has appeared to focus much more on a crossover ERV, “the Mullen Five” and battery development.
There also are allegations by Hindenburg, a research firm that has shorted MULN stock, but that I have found to be mostly accurate in the past.
According to the firm, Mullen’s cargo vans are actually Chinese EVs rebranded with a company logo, while the automaker only spent a paltry $3 million on R&D in 2021, Teslarati reported.
Put it all together, add in Mullen’s still-elevated market capitalization of $342 million, and MULN stock is way too risky for my taste.
On the date of publication, Larry Ramer held SHORT positions in COIN and OCGN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.