With a contentious time in 2022 coming to a close, it may be helpful to look back and consider the most sold-off stocks last year. Similar to learning from prior mistakes, investors may be able to garner lessons from the worst-hit market ideas. Basically, these are companies that currently sit just a few steps away from total implosion.
For this exercise, I’m not going to bother with framing a narrative to explain the fallout. Rather, based on data compiled by Barchart.com, the below securities represent the absolute most sold-off stocks this year. First, I’ll give you the performance stats, then provide some analysis. So, if you’re ready, let’s start on this post-mortem assessment.
|ATNF||180 Life Sciences||$1.24|
180 Life Sciences (ATNF)
Specializing in the research and development of inflammatory diseases, 180 Life Sciences (NASDAQ:ATNF) on paper offers a compelling narrative. Unfortunately, Wall Street did not share the same opinion. On a year-to-date basis, ATNF fell a staggering 97.2%. Most of the pain materialized in the back half of 2022. In the trailing six months, ATNF plunged 87.4%.
Financially, as an early stage biotechnology firm, its operational financial stats are nonexistent. Therefore, it must rely on alternative forms of financing such as grants to stay afloat. Still, without much clinical success, it’s going to be tough for 180 Life Sciences to attract additional backers. For instance, its retained earnings line item shows a loss of almost $86 million. Keep in mind that the current market capitalization of ATNF is a little over $4.5 million. That’s not exactly a confidence-boosting comparison.
To be sure, 180 features a solid balance sheet with a decent – though not great – cash-to-debt ratio. However, I don’t think that’s enough for ATNF to rise above the category of most sold-off stocks of 2022.
An electric vehicle manufacturer that develops what it terms fun utility vehicles (hence the ticker symbol) Acrimoto (NASDAQ:FUV) initially enjoyed significant upside demand. Believe it or not, data from Google Finance reveals that on an adjusted basis, FUV reached a price well over $600 at its peak in Feb. 2021. These days, circumstances soured and catastrophically so.
Since the start of the year, FUV dropped 97.63% of equity value. As with 180 Life Sciences, most of the pain materialized during the back half of 2022. In the trailing half-year period, FUV plunged a staggering 93.98%. Even in the near term, shares lost 49% of value in the trailing month. About the only positive on a technical basis is that shares gained 6.3% in the past five sessions. Big whoop.
Not surprisingly, Gurufocus.com rates Acrimoto as a possible value trap. Aside from the dreadfully negative profit margins, the company features an Altman Z-Score of 6.36 below parity. This indicates a deeply distressed enterprise with higher-than-normal bankruptcy risk in the next two years. Thus, FUV is one of the most sold-off stocks to avoid.
During the height of the coronavirus pandemic, Carvana (NYSE:CVNA) enjoyed a stratospheric ascent. On a monetary basis, CVNA benefited from the global supply chain disruption that reduced new-car inventory. Therefore, used cars commanded rich premiums. More importantly, fears of Covid-19 substantially boosted Carvana’s largely contactless approach to selling cars.
However, Covid-19 fears faded and thus, so too did the justification of paying a premium for contactless vehicle purchases. Basically, people could get a far better deal working with traditional dealerships or going private party. As a result, CVNA suffered but the magnitude of volatility caught many off guard. Shares dropped 98.2% YTD. Perhaps even more startling, just in the past five sessions, CVNA tanked 22.33%.
But can Carvana make a comeback? While vehicles mostly represent necessities as a commuting platform, I don’t see CVNA reversing its losses. In an economically trying period, consumers will look to save money. They’re not going to pay unnecessary premiums. Therefore, CVNA is one of the most sold-off stocks to sit out on.
A China-based holding company, Missfresh (NASDAQ:MF) fresh produce and fast-moving consumer goods to customers through its online e-commerce platform and distributed mini warehouse (DMW) networks. Per its website, Missfresh operates within China’s neighborhood retail industry. While food obviously represents a daily necessity, serving it doesn’t necessarily exempt one from volatility.
For Missfresh, the fundamental headwind centers on China’s draconian zero-Covid policy. While Beijing recently demonstrated a willingness to relax its strict measures, it’s difficult to trust the government there. Thus, it’s not surprising that MF dropped like, well, Samuel L. Jackson’s favorite word. On paper, this translates to a YTD loss of 98.36%.
Now, unlike the other most sold-off stocks on this list, MF showed significant near-term momentum. In the trailing five days, shares gained nearly 8%. And in the trialing month, they’re up nearly 56%. Still, Missfresh suffers from a weak balance sheet and terrible profitability metrics. You probably should stay away from it.
Digital Brands (DBGI)
Billed as a modern retail ecosystem, Digital Brands (NASDAQ:DBGI) claims to reshape the shopping experience by personalizing styled looks based on consumer preferences. That’s a vague description. More specifically, the company represents a conduit between individuals and a hand-picked group of fashion brands. Frankly, I’m not really sure that’s any better.
Anyways, the market clearly does not care for DBGI stock, no matter what fancy words management uses to describe the underlying enterprise. Since the Jan. opener, DBGI dropped 98.45% in equity value. As with the other most sold-off stocks, Digital Brands incurred the most damage in the second half of 2022. In the trailing month, shares fell 79.54%. Nearer-term snapshots provide no confidence that the volatility will reverse itself.
Fundamentally, the problem is that Digital Brands is not sustainable. On its balance sheet, the company posts a poor cash balance relative to debt. Also, its Altman Z-Score indicates a deeply distressed, bankruptcy-likely business. So, it’s one of the most sold-off stocks to avoid.
Embark Technology (EMBK)
Headquartered in San Francisco, California, Embark Technology (NASDAQ:EMBK) is the longest running self-driving truck program in America, per its website. While the narrative sounds appealing, the problem is that the sector faces much criticism. Recently, I covered the layoffs at TuSimple (NASDAQ:TSP), which provides autonomous truck driving systems.
With the autonomous driving industry, it’s not just about the lack of fiscal substance. It’s also that autonomous vehicles – particularly big rig trucks – represent major safety risks. Not surprisingly, Wall Street has been brutal on Embark Technology. Since the beginning of the year, EMBK lost 98.71% in equity value. Notably (but not in a good way), EMBK dropped 20.70% in the trailing five sessions. I want to believe in autonomous transportation. However, some evidence suggests that the tech is not ready for prime time. With better options for your money available, EMBK is one of the most sold-off stocks to avoid.
Baudax Bio (BXRX)
Last and certainly the least, we come to Baudax Bio (NASDAQ:BXRX). Don’t shoot the messenger but according to Barchart.com, at time of writing, Baudax is not one of the most sold-off stocks. No, it is the most sold-off stock. We’re talking about a catastrophic, mind-numbing loss of 99.3%. Just a bit more volatility and this bad boy is gone.
Based in Malvern, Pennsylvania, Baudax Bio is pharmaceutical company focused on developing and commercializing innovative products for acute care settings. To be sure, against a medical framework, Baudax offers myriad relevancies. However, people enter the capital markets to make money. With BXRX, it’s been nothing but a disaster.
For example, in the trailing month, shares lost 59.64%. There’s really no other way to describe the circumstance other than the stock is in free fall. If you needed more evidence to stay away from Baudax, its balance sheet pings disaster. With an Altman Z-Score of 18.9 below parity, I’d be surprised if BXRX avoids bankruptcy.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.