In light of the market’s recent performance, you may be wondering what Nasdaq stocks to sell to reduce losses. While these types of stocks (as measured by the Nasdaq Composite) have already been hit hard year-to-date, it’s unclear whether a “bottoming out” has finally happened.
The external factors weighing on these types of stocks aren’t going away anytime soon. The Federal Reserve continues to raise interest rates. Many Nasdaq-listed growth stocks, still trading at rich valuations, could experience more multiple compression.
Also, economic growth is slowing down. An economic slowdown, or worse a recession, may also play a role in affecting their respective valuations.
That’s not to say it’s high time to dump all stocks listed on this exchange. Many high-quality names will ride out today’s challenges, and possibly make a comeback when macro conditions improve.
But in the case of many of the shakier names, including these three Nasdaq stocks to sell, it’s best to make an exit now, if you currently have them in your portfolio. Each one is at risk of further price declines.
After going from favorite to underdog, sportsbook operator DraftKings (NASDAQ:DKNG) may appear to be on the verge of pulling off an upset. That is, continue to recover from its 2022 losses, and make a further move back toward prior price levels.
However, before you decide to hold onto your DKNG stock wager, its recent strength could end up being little more than a dead-cat bounce. A revenue beat last quarter may have enabled it to make epic moves, but shares could reverse course, as a key issue (a lack of profitability) comes off the back burner.
While now reining in its marketing costs, DraftKings isn’t set to report positive earnings for years. Analyst estimates call for losses through at least 2024.
Rising interest rates will further discount stocks valued more on future potential. It may be at risk of falling back to its original SPAC price ($10 per share).
Opendoor Technologies (OPEN)
Interest rates also play a big role in why Opendoor Technologies (NASDAQ:OPEN) is one of the Nasdaq stocks to sell.
As you may know, this company is a real estate iBuyer, purchasing residential properties and flipping them for a profit.
This business looked extremely promising during the recent housing boom. It doesn’t anymore. With the Fed’s rate hikes resulting in mortgage rates doubling over the past year, home sales have fallen considerably.
As InvestorPlace’s Shrey Dua reported on Sept. 1, many economists predict that some regional markets will see big drops in housing prices.
This may leave the already-in-the-red company in an even worse state. Its losses could accelerate, as it tries to move homes in a buyer’s market. While down nearly 70% so far in 2022, OPEN stock may keep dropping.
Upstart Holdings (UPST)
After a rollercoaster ride from $20 to $400 to now the high-$20s per share, bottom-fishers may be taking a look at Upstart Holdings (NASDAQ:UPST) as a possible opportunity.
Even as this fintech firm, which uses algorithms powered by artificial intelligence (or AI) to underwrite personal loans, is seeing a big slowdown in growth, it is already profitable.
Earnings estimates make UPST stock look like growth at a more-than-reasonable price. However, these estimates are hardly a lock. As I argued back in May, the company appears poorly positioned to ride out an economic downturn. Its alternative to traditional loan underwriting methods is only now being tested.
It’s possible a recession calls into question whether Upstart truly invented a better mousetrap. This may result in it struggling to hold onto its existing lending partners, much less add new ones into the fold. In turn, causing another big plunge for this stock.
On the date of publication, Thomas Niel 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.