Only a few months ago, the situation looked bleak for the overall markets, and looked likely that the bears would ultimately win.
But of course, this was really a great buying opportunity, propelling both the Dow Jones and S&P 500 near all-time highs (or passed it, depending on who you ask).
Yet, this rockiness is a bit unnerving (especially for those who sold when the markets were plunging).
Besides, as we go into earnings season, there could be some big drops. Just look at the recent performance of Netflix, Inc. (NFLX), which sunk like a brick on news of its soft guidance.
So then, what are some stocks to sell right now? Well, here’s a list of seven to put on your radar.
Stocks to Sell: Zynga Inc (ZNGA)
Zynga (ZNGA) has been trying hard to make the transition away from the Facebook Inc (FB) platform to mobile games. That process has proven difficult, as Zynga’s revenues have stalled and profits remain elusive.
Now there is still some good news. ZNGA has retained a new CEO in Frank Gibeau, who has a stellar background. Before joining Zynga, he held executive posts at Electronic Arts Inc. (EA), where he managed the mobile division, including games like The Simpsons: Tapped Out, Plants vs. Zombies, Real Racing, Bejeweled, Star Wars: Galaxy of Heroes, Minions Paradise, SimCity, The Sims and much more.
Even with Gibeau, however, Zynga is still a good pick for stocks to take out of your lineup. If anything, the company will likely face a long road to revive growth.
Perhaps the biggest issue is the user base, which has continued to deteriorate. In the latest quarter, monthly active users dropped by a grueling 30% to 68 million and the daily active users fell by 14%.
Granted, Zynga has a slate of ten titles for this year and some could be breakout hits, such as Dawn of Titans and CSR2. But the problem is Zynga’s prolonged dry spell amid intensely competitive app stores.
Stocks to Sell: Tableau Software Inc (DATA)
Tableau Software (DATA) is a top player in the fast-growing data analytics space. But things went haywire in early February, when the stock got cut in half because of muted guidance.
Why? Well, other tech operators want to get a piece of the lucrative market. For example, MicroStrategy Incorporated (MSTR) and Qlik Technologies Inc (QLIK) have been getting traction with their own offerings, which are generally at lower price points. And yes, DATA must compete against hard-charging startups like BeyondCore.
Yet the biggest threat is Microsoft Corporation (MSFT), which has been aggressively pushing its Power Bi 2.0 application.
So in light of all this, the recent earnings disappointment for DATA may not be temporary. What’s more, the valuation on the stock is still not cheap, with the forward price-to-earnings multiple at about 71 times. Thus, if there is more bad news, DATA stock could still be among Wall Street’s stocks to toss in the bin.
Stocks to Sell: eBay Inc. (EBAY)
Lately, several Wall Street analysts have gotten downright sour on the prospects of eBay (EBAY). There’s Brian Nowak of Morgan Stanley (MS), who thinks that the company is feeling the pressures from slowing international markets but also the intense competitive impact from Amazon.com, Inc. (AMZN).
Then there is Paul Vogel of Barclays PLC (ADR) (BCS), who is concerned about the issues with Alphabet Inc (GOOG, GOOGL). Keep in mind that eBay gets substantial traffic from the Google search engine, which continuously changes the algorithms used in search traffic.
But just taking a look at the recent financials should be enough for investors to put this one among the stocks to sell. In the latest quarter, sales were flat as eBay was not able to gin up much excitement during the critical holiday season. The guidance was also weak. The company expects growth in the current quarter of a meager 3% to 5%.
Stocks to Sell: Twitter Inc (TWTR)
Twitter (TWTR) has had a bounce off its lows in February, rising about 23%. But this is probably more of a relief rally.
For the most part, there are still good reasons to put this on the list of stocks to sell. First of all, Twitter isn’t an inherently simply social platform to use, making it tough to draw in more users.
Next, Twitter faces tougher competition: Facebook is adding more real-time features (Twitter’s bread and butter, essentially), as is SnapChat and even Google.
Oh, and the executive suite at Twitter is a revolving door. Some of the recent departures include Kevin Wiel (product chief), Alex Roetter (engineering chief), Skip Schipper (a vice president of HR), Katie Stanton (global media chief) and Jason Toff (general manager at Vine).
Although, the biggest issue for TWTR is the platform’s user growth, or lack thereof. In the latest quarter, user growth was completely flat.
If the negative user growth trends continue, it’s inevitable that revenues will trail off. The scary thing is, the company has really no compelling strategy to get things back on track.
Stocks to Sell: GoPro Inc (GPRO)
GoPro (GRPO) hasn’t been much fun for investors during the past year. And even with the recent rally, this one should still be a top pick for spring cleaning investors.
The financials tell the story. During the latest quarter, revenues plunged by 31% to $436.6 million, and the loss came to $34.5 million, or 25 cents per share.
And the guidance was awful. For the current quarter, GPRO expects revenues of $160 million to $180 million, well below the analysts’ consensus of $298 million.
The problem is that GoPro’s flubbed with its Hero4 Session. Simply put, the product did not have many compelling features.
In the meantime, GoPro must fight back against an onslaught of competition. Rivals include biggies like Canon Inc (ADR) (CAJ), Nikon Corp (ADR) (NINOY), Samsung (SSNLF) and Sony Corp (ADR) (SNE). Then there is buzz that others may enter the market like Apple Inc. (AAPL) and even Under Armour, Inc. (UA).
It’s true that GoPro plans to move into the promising virtual reality market, and even into the drones market, but these categories are quickly reaching saturation.
Instead, a turnaround of GoPro probably hinges on the next version of its core product, the GoPro Hero 5. But this will not likely hit the markets until October — that’s a long time for antsy shareholders to wait.
Stocks to Sell: Qualcomm, Inc. (QCOM)
The management team at Qualcomm Incorporated (QCOM) has had to deal with an assortment of tough challenges. For example, there is potential antitrust exposure in the U.S., European Union, China and even South Korea.
No doubt, it is tough for investors to gauge the impact of all this. Although, one thing is certain: Antitrust litigation is time-consuming and expensive. It’s what made giants like Microsoft, IBM (IBM) and AT&T (T) stumble.
But with QCOM, the situation may be even worse. Keep in mind that the antitrust investigations focus on the core business model of the company (technology licensing), which accounts for about 60% of operating income.
Something else: It’s going to get tougher for QCOM to keep up shipment volumes, with smartphones nearing peak saturation levels. Already there are ominous signs of this. In the latest quarter, chip shipments dropped by 19%.
And while the valuation on QCOM stock is cheap — with the forward price-to-earnings multiple at roughly 11 times — it may remain cheap for some time, especially because of the overhang of the potential antitrust litigation.
Stocks to Sell: Yelp Inc (YELP)
Yelp (YELP) looks more like a dot-com has-been. Consider that the company expects revenues for the year to increase by 25% to 27%, down from last year’s robust 46% ramp. What’s more, Yelp has been losing money for the past four quarters.
But this should not be a surprise. Hey, there are many reviews sites, whether from Angie’s List Inc (ANGI), Amazon.com, Priceline Group Inc’s (PCLN) OpenTable, Pro.com, Thumbtack, Kudzu or Urbanspoon.
Unfortunately, the competitive situation will only get worse. After all, Facebook has been pushing its own listings. So if a company is already using the social network’s advertising system, might it just be easier to also use it for reviews as well? Seems like a good bet.
In fact, as noted about eBay, Yelp is vulnerable to changes in Google’s search algorithm as well. Note that the company gets more than a majority of its web traffic from this source.
Finally, even with the drop in Yelp stock, the valuation is still not cheap. The shares trades at 2.9 times revenues, compared to ANGI’s 1.4 times and Groupon’s (GRPN) 0.8 times sales.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.