As the markets continue to change and more economic indicators cross their yield, signaling turbulence ahead, it is time to review your investment portfolio. Due to bad conditions, it may be a good idea to reassess holdings in communication, technology, and consumer discretionary sectors.
Despite all the recent clutter on AI and other innovations, technology stocks are no exception to heading south. Lastly, the consumer discretionary sector is also susceptible to economic slowdowns as it relies on individual spending power to generate growth. Furthermore, the communications sector can face instability as a result of overleveraged debt and overvaluations stemming from 5G integration.
Thus, owning positions in such sectors comes with an added risk amidst their current adversities and market vulnerabilities. These fundamental weaknesses across these companies indicate why these stocks are on the stocks to sell list. Taking action on these stocks may protect portfolios from potential downturns.
Trump Media & Technology (DJT)
Trump Media & Technology (NASDAQ:DJT) operates Truth Social and other digital ventures. Despite a high-profile debut, it struggles with major losses and low revenue. The company reported a $12.1 million operating loss in Q1 2024. $6.3 million was spent on one-time merger payments with Digital World Acquisition. Even excluding these, there was still a significant operating loss. The loss reached $327.6 million, mainly due to non-cash expenses of $311.0 million from promissory note conversions and liability eliminations. These figures underscore the company’s severe financial challenges.
Moreover, non-cash expenses do not directly affect cash flow. However, they indicate financial instability and poor financial management, which could limit the company’s growth and financial stability. In Q1 2024, Trump Media & Technology generated only $770,500 in revenue. Considering the company’s public debut, marketing for Truth Social, and streaming initiatives, this amount is low. The modest revenue reflects the company’s developing business model and challenges in scaling revenue.
Overall, these financial issues, combined with merger-related non-cash expenses, highlight instability and inefficiencies. Thus, this makes Trump Media & Technology a top pick among stocks to sell.
Snowflake (SNOW)
Snowflake (NYSE:SNOW) is a cloud-based data warehousing company that offers data storage, processing, and analysis services. The company has shown impressive revenue growth. However, it faces critical weaknesses, such as revenue variability and forecasting challenges. In Q1, Snowflake’s product revenue reached $790 million, a 34% year-over-year increase. Despite strong growth, revenue variability is concerning. Growth moderated from February and March into April. This could indicate customer demand instability or seasonal fluctuations. Sustaining momentum year-round is challenging. Forecasting relies heavily on observed behavior, including new features like Snowpark and Cortex.
Further, 2025 guidance includes Snowpark but excludes revenue for newer features. This cautious approach highlights revenue uncertainty from new initiatives. Snowflake’s AI investments have increased GPU-related costs. These costs affect revenue and research expenses. The investment aims to unlock future revenue opportunities. However, it lowers margins and increases financial pressure short term. The operating margin is expected to be only 3% for fiscal 2025. This is a significant drop due to increased costs. Snowflake’s AI-related investments lead to higher costs and pressure on margins.
To sum up, these factors contribute to Snowflake’s inclusion on the stocks to sell list due to potential growth disruption and financial instability.
Big Lots (BIG)
Big Lots (NYSE:BIG) is a retail company specializing in discount merchandise. This includes furniture, food, and household items. The company needs stronger comparable sales and better store performance, reflecting broader issues in customer attraction and retention. Q1 saw a 9.9% decline in comparable sales, worse than expected. This trend indicates a decrease in consumer demand and growth strategy challenges. Weak comparable sales points to broader customer attraction issues. Multiple factors, including fluctuating consumer sentiment, affect sales. Adverse weather conditions also impacted performance in February and April. Despite a March rebound, overall quarterly performance fell short.
Additionally, this affects the company’s ability to cover costs and achieve profitability. For instance, with $1.01 billion in Q1 revenue, a 9.9% drop implies a $100 million sales loss. Reduced revenue pressures, financial stability, and growth prospects. Weak sales reflect consumer sentiment and store traffic issues. Low consumer sentiment leads to reduced footfall and sales, which hampers growth targets. Inconsistent traffic and sales conversion point to marketing and operational inefficiencies. Sales decline and ineffective growth strategies raise concerns, putting Big Lots on the list of top stocks to sell.
On the date of publication, Yiannis Zourmpanos 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.