Knowing what stocks to avoid as a savvy investor can be as important as finding the next big company with impressive returns. Sometimes, it’s best to work with specific companies; it’s best to cut your losses and move on, depending on how the stock looks in the long term and investors’ overall sentiment. It can be a mistake to continue buying into a sinking ship.
Below, I discuss three companies that are sinking ships, are too far gone and offer investors nothing but losses. These stocks to sell have all experienced significant downturns and profitability and have also lost the favor of many investors, making these companies avoid at all costs.
Virgin Galactic Holdings (SPCE)
Virgin Galactic Holdings (NYSE:SPCE) is located in Las Cruces, New Mexico, focusing on developing and manufacturing spaceships primarily for the use of space tourism. Virgin Galactic provides private spaceflight services for individuals and also for scientific research purposes.
Over the past year, the stock has seen a large decline of 65% due to continued issues with profitability. Even in this environment of high interest rates, leading companies like Virgin Galactic require a decent amount of financing to continue operating. Investors are uncertain regarding the future of Virgin Galactic due to its business model and high operating costs.
On August 1, the company released its earnings results for the second quarter of 2023, which reported revenue growth of more than five-fold to $1.9 million compared to the previous year. Its net loss continued to grow to $134 million. Virgin Galactic plans to report its earnings results for the third quarter on November 8 after the market close.
Virgin Galactic saw a decent amount of investor interest in 2021, in which its stock was trading at approximately $60 per share. Since then, a number of the issues I previously mentioned caused it to fall out of favor and plummet dramatically.
Sunrun (RUN)
Sunrun (NASDAQ:RUN) is headquartered in San Francisco. It designs, manufactures and installs solar panels primarily for residential purposes. Sunrun also offers battery storage solutions.
Year-to-date, the company’s share price has fallen by 54%. That was due to poor earning results and a sector-wide downturn for many renewable energy stocks. On November 1, it reported third-quarter earnings results for 2023, which showed total revenue decreased by 11% and net loss expanded by over nine-fold to $1.5 million compared to 2022.
Renewable energy, in general, has been experiencing a large downturn in overall interest from investors from several factors, including a high-interest rate environment, making it very difficult for companies to afford large clean energy projects. Even after the Inflation Reduction Act in 2022 passed, which resulted in many renewable energy companies receiving financial incentives such as tax credits, several renewable energy stocks still reported a slate of poor earnings results. Those companies included Enphase Energy (NASDAQ:ENPH), a solar panel installation company, and NextEra Energy Partners (NYSE:NEP), a renewable energy-focused subsidiary of NextEra Energy (NYSE:NEE).
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID), located in Newark, California, designs, manufactures and sells electric vehicles and other related components. Its production vehicles include the Lucid Air luxury electric sedan and Lucid Gravity, an electric SUV expected to roll out to the public sometime next year.
Over the past year, Lucid Group has experienced a significant drop in its share price, falling approximately 69%. On November 7, the company reported earning results for Q3 2023, showing that total revenue fell by 29% and net loss grew by 19% compared to the year before. On the same day, Lucid Group announced the appointment of a new chief operating officer. Marc Winterhoff.
Lucid Group said it anticipates vehicle deliveries for the remainder of this year will be lower than expected, from more than 10,000 units altogether to between 8,000 and 8,500 units. That announcement was a large blow to a company already experiencing many other difficulties.
As of this writing, Noah Bolton did not hold (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.
