Stock prices don’t only go up. They also go down. So, it’s important to recognize beforehand the stocks that could crash so you can limit the damage to your portfolio.
A number of companies that enjoyed big run-ups in their share price over the past year are now experiencing extreme volatility or are watching as their stocks lose momentum.
Whether it is poor earnings results, rising competition, sector volatility, or a combination of all three, many stocks are on the precipice.
In this article, we look at four stocks that could crash soon.
- Riot Blockchain (NASDAQ:RIOT)
- Palantir Technologies (NYSE:PLTR)
- Novavax (NASDAQ:NVAX)
- Nio (NYSE:NIO)
Stocks That Could Crash Soon: Riot Blockchain (RIOT)
As Bitcoin (CCC:BTC-USD) goes, so goes RIOT stock. The Colorado-based company is focused exclusively on mining Bitcoin mining and aims to be the “largest and lowest-cost producers of Bitcoin in North America.”
That may sound exciting to investors who want to get exposure to red-hot Bitcoin. But it also means that Riot Blockchain’s fortunes are intertwined with cryptocurrency and the company’s share price literally rises and falls in tandem with the BTC market price.
And, as anyone who has been following the market this year knows, Bitcoin and other cryptocurrencies are extremely volatile. This has sent RIOT stock on a roller coaster so far in 2021. Year-to-date, Riot Blockchain’s share price has risen 382% and then fallen 45%, only to rise again by 24%.
Swings of 10% or greater in a single day are common with this stock and the volatility shows no signs of abating anytime soon. Should Bitcoin crash as many bearish analysts forecast, Riot Blockchain can be expecting to plummet right alongside it.
Palantir Technologies (PLTR)
Palantir Technologies has been on a topsy-turvy trajectory since it went public last year. After running up 147% to $23.50 a share from its market debut of $9.50, PLTR stock gyrated wildly this year.
Investors struggled with what to make of the Denver-based company that is named after a stone in The Lord of the Rings books and claims to “specializes in big data analytics” but has several large contracts with the U.S. Department of Defense and other governments around the world.
Year-to-date, PLTR stock is up only fractionally at $23.50. The share price did run up as high as $45 in late January, but the company’s recent earnings results have since deflated the stock considerably. In reporting its earnings, Palantir said its revenue rose 47% in 2020 compared to 2019, but added that it forecasts sales growth to slow sand be around 30% in 2021.
The company, which remains largely dependent on government contracts, had about $1 billion in revenue in 2020 and is trying to reach $4 billion in sales by 2025. This news seems to have underwhelmed investors, who pushed the stock lower.
With investors increasingly rotating out of technology plays, PLTR stock could get dropped like a hot potato as people favor cyclical stocks tied to the economy reopening or favor large and more established technology companies.
Stocks That Could Crash Soon: Novavax (NVAX)
Looking at the charts, one could argue that NVAX stock is already crashing. After hitting an all-time high of $331.68 a share in early February, Novavax stock has tumbled 37%. The decline has been accelerating after the Maryland-based company issued lackluster financial results and struggles to bring its promised Covid-19 vaccine to market.
Investors appear to have grown impatient with this vaccine development company now that there are three separate approved Covid-19 vaccines available.
Specifically, Novavax reported a fourth-quarter net loss of $177.6 million, which was the worst in the company’s history. It also said that it hopes to file for emergency use authorization of its Covid-19 vaccine with the U.S. Food and Drug Administration sometime in the second quarter of this year, but was non-committal on timing.
By the time the company gets its Covid-19 vaccine to market, the pandemic could be over. And with losses widening, there is little incentive for investors to buy NVAX stock.
The shares are already well beyond correction territory. A continued slide could turn into an outright crash.
Can Chinese electric vehicle maker Nio become a leader in the global automotive market? Can it catch the current No. 1 electric car maker Tesla (NASDAQ:TSLA)? Not at the rate it’s going.
NIO stock recently dropped 8% in a day after the company reported fourth-quarter revenue of $1 billion and a loss of 16 cents per share, both of which missed analyst estimates. Nio did deliver 43,728 electric vehicles in 2020, more than double the 20,565 vehicles it delivered in 2019. But Nio has a long way to go to surpass Tesla, which delivered nearly 500,000 vehicles last year.
After cresting at $66.99 a share on February 9, NIO stock fell 30% and looks likely to continue decelerating following its earnings results. While the Chinese government in Beijing has championed the automaker and has stated publicly that it wants Nio to become a world beater in the fast growing electric vehicle market, there’s every indication that the company’s current performance doesn’t justify the share price.
With new electric vehicle start-ups appearing on an almost daily basis and established automakers moving into the space at lightning speed, Nio could end up left in a cloud of dust.
On the date of publication, Joel Baglole held long positions in NVAX, NIO and TSLA.