7 Over-Hyped Stocks to Sell Before They Plunge
Maybe you’ve fallen for the hype and it’s time to think about which stocks to sell. It’s easy to get excited about a stock with massive potential, or one that seems like everyone is talking about. Social media and 24-hour financial news broadcasts play a part, too, in building up a hot stock.
The fear of missing out, or FOMO, is real. But you can’t let the hype force trigger you to make a bad decision. If you have, you have some stocks to sell.
All too often, yesterday’s hot stock is today’s disappointment that’s doing nothing but dragging your portfolio into the red. It doesn’t take much for the shine to rub off that apple – and reveal the worm lurking underneath.
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The names on this list get plenty of attention and all were high-flyers at one point. But you’ll see a more complete picture about which stocks to sell when you take the emotion out of the equation, which is exactly what the Portfolio Grader does.
The Portfolio Grader analyzes stocks based on earnings performance, revenue and profit growth, analyst sentiment, momentum and other factors. Then it assigns stocks a grade from “A” to “F” to indicate if they are good buys now or stocks to sell.
These over-hyped names most certainly fall in the latter category.
Lucid Group (LCID)
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Lucid Group (NASDAQ:LCID) is one of several automakers that were a hot bet just a couple of years ago to make major inroads in the electric vehicle market. LCID stock topped $55 per share in the fourth quarter of 2021.
Today, you can buy Lucid shares for about $3. The stock price is down 63% in the last 12 months and there’s speculation in the financial community that the company could run out of cash within a year.
Last year, Lucid fell far enough to be removed from the Nasdaq 100 index. There isn’t a lot of hope that the company will turn things around this year. It produced only 2,391 vehicles in the fourth quarter, down from 3,493 a year ago.
LCID stock gets a “D” rating in the Portfolio Grader.
Pfizer (PFE)
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Drugmaker Pfizer (NYSE:PFE) was one of the hottest pharma stocks you can buy during the Covid-19 pandemic. It was one winner in the race to come up with a Covid-19 vaccine.
But now the U.S. government stopped paying for Covid-19 vaccines and treatments, leaving it solely in the hands of insurance companies.
Since only 14% of U.S. adults are believed to have gotten an updated vaccine, Pfizer’s revenues are way lower than they were just a year ago.
Earnings in the third quarter were $13.2 billion, which is a lot of money. But it’s down 41% from a year ago. Pfizer posted a loss of $2.38 billion, or 42 cents per share, for the quarter.
PFE stock is down 51% from its highs of two years ago. It gets an “F” rating in the Portfolio Grader.
GameStop (GME)
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Oh, my. I can’t think of any stock that’s been as over-hyped as GameStop (NYSE:GME). This company has literally been the subject of s streaming TV documentary about the retail investors on a Reddit forum that bandied together to take on short-sellers.
For a few magical days, GameStop stock actually shot to the moon. Short-seller Melvin Capital went under. But then Robinhood (NASDAQ:HOOD), whose platform was handling many Reddit-fueled transactions, imposed trading restrictions that restricted new long positions in GME stock, and the squeeze was over.
The whole thing was ugly, running purely on emotion and excitement. But the fundamentals of GameStop never supported a higher stock price, despite the so-called “diamond hands” that the company’s fans celebrated.
Revenue in the third quarter was $1.07 billion, down 9% from a year ago. The company also posted a net loss of $3.1 million or 1 cent per share.
GameStop’s bulls would simply say, “I like the stock.” But the numbers don’t lie. GME stock is down 27% in the last year, getting a “D” rating in the Portfolio Grader.
Target (TGT)
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Undoubtedly, Target (NYSE:TGT) is an immensely popular retailer, boasting nearly 2,000 stores. But the shine is off Target shares, as the company’s seen a drop in shoppers.
Depressed consumer spending and supply chain problems took their toll.
The stock is down 43% from its 2021 high, including 14% in the last year. Target’s best thing going for it is its dividend, which at 3.1% has increased for 53 consecutive years.
But the dividend doesn’t make up for this being an over-hyped stock. Third-quarter earnings showed revenue of $25.4 billion, down from $26.5 billion a year ago. And the fourth quarter would not get any better, with comparable sales set to decline by mid-single digits.
Target should be a better stock than it is. It gets a “D” rating in the Portfolio Grader.
Nio (NIO)
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If you want to talk about a disappointing Chinese stock, the conversation wouldn’t take long to turn to Nio (NYSE:NIO). The electric vehicle maker lost all the momentum it built in 2021 when shares rose from less than $10 to more than $60.
Nio’s returned all those gains; shares today trade for just $6, and the stock is down 50% in the last year.
Nio posted a net earnings loss of 4,556.7 million RMB ($624.6 million) in the third quarter. It’s making plans to spin off its battery production unit and, after doing so, will no longer control its supply chain.
Nio is also very dependent on China’s ailing economy. When Beijing fails to grow its GDP, or an index like the CSI 300 shows weakness, that is usually reflected in Nio stock.
I used to have high hopes that Nio would be a challenger to Tesla (NASDAQ:TLSA) in China. But there are other, better Chinese EV stocks out there now, and Nio is just an over-hyped stock to sell. It gets a “D” rating in the Portfolio Grader.
Alibaba (BABA)
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I don’t think you can call Alibaba (NYSE:BABA) the Amazon (NASDAQ:AMZN) of China any longer. While Alibaba shares some traits—it’s an e-commerce company with a cloud computing presence—Amazon has lapped BABA stock over and over in recent quarters.
Alibaba’s rough road started in 2020 when Chinese regulators put the brakes on the proposed spinoff of Alibaba’s fintech unit, Ant Group. Beijing eventually issued a $2.8 billion antitrust fine.
And then last year, Alibaba nixed its plans to spin off its cloud business, prompting more investors to dump their shares.
BABA stock is down over 40% in the last year and down by over 70% since December 2020. BABA stock gets an “F” rating in the Portfolio Grader.
Walt Disney Co. (DIS)
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The House of Mouse isn’t the happiest place on Earth any longer, at least if you’re an investor. Walt Disney Co. (NYSE:DIS) used to be in the habit of printing money, but a change in leadership was traumatic.
Disney fought Florida’s governor in culture wars and even its employees. ESPN’s costs soared and competition on streaming services intensified. Bob Iger hustled back to reclaim the CEO job and is trying to right the ship, but he’s reportedly planning to step aside again in 2026.
There also may be a proxy fight in the works, with Trian Fund Management and activist investor Nelson Peltz making moves within the board of directors.
DIS stock is down 50% in the last two years. It gets a “D” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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