Fueled by improving macro conditions, such as easing Treasury yields and a Federal Reserve rate hike skip, coupled with a positive earnings season, optimism pervades.
However, not all US stocks share this bullish sentiment. In a detailed analysis on November 10, Finbold identifies three stocks currently facing headwinds, cautioning traders to steer clear in the near term.
Lucid Motor (NASDAQ: LCID)
The first stock that shows no particular appeal for the time being is the troubled luxury electric vehicle (EV) maker Lucid Motor (NASDAQ: LCID).
The latest of a series of challenges the carmaker experienced this year is the company’s underwhelming Q3 report. Lucid sold 1,375 vehicles in the most recent quarter and reported revenue of $137.8 million, missing the consensus estimates by almost $50 million.
Furthermore, Lucid trimmed its production outlook for the full fiscal year, from the previous 10,000 target to 8,000-8,500. This guidance is even more unexceptional when compared with the one Lucid provided during its initial public offering (IPO) stage. At the time, the EV manufacturer estimated 500,000 deliveries in 2023.
Lucid also reported a loss of $630.9 million for the third quarter.
As a result, LCID fell 2.7% to a new record low of $3.65 on Friday, November 10. The stock fell 22% over the past five days and around 33% on the month.
Tesla (NASDAQ: TSLA)
Although it remains an industry giant and by far the most successful EV company so far, TSLA trades at a premium valuation, and in its current state, it shows little to justify that price tag.
Its latest earnings report displayed a significant decline in its profit margins – a drop that came as a result of the carmaker’s many price cuts imposed throughout the past several months. These challenges prompted Wall Street analysts to cut their price targets on TSLA, most recently HSBC Global, which valued the EV stock at $146 – nearly 30% lower than its current price.
Meanwhile, multiple analysts remain bullish on TSLA in the long term, although those cases mainly depend on how successfully and rapidly can the company fulfill its ambitious plans related to autonomous driving, supercomputers, and robotaxis.
Tesla fell 1.3% to $207.23 on Friday. Over the past week, the stock is down 7.4% and over 21% on a monthly basis.
VinFast Auto (NASDAQ: VFS)
Lastly, another auto stock. Following its August IPO, EV manufacturer VinFast (NASDAQ: VFS) staged a rarely-seen stock market ascent, hitting a valuation of more than $200 billion shortly after its debut. In just several weeks, the Vietnam-based company became the third most valued carmaker in the world.
But just like its takeoff, VinFast’s decline was also rapid and abrupt. Currently trading at a valuation of $14.2 billion, VFS experienced a correction of more than 90%. And even now it looks overvalued.
The auto manufacturer anticipates 2023 revenues totaling $1.875 billion, indicating a price-to-sales multiple exceeding 10x. This valuation surpasses not only established industry leader Tesla, but also outstrips emerging players like Rivian (NASDAQ: RIVN), NIO (NYSE: NIO), and others.
Moreover, the stark contrast in cash reserves is noteworthy; while industry counterparts boast billions to support their operations, VinFast reported a modest $131 million on its balance sheet as of September’s close.
Sitting at $6.1 per share, VFS fell 6% in the past 24 hours, 1.1% in the past week, and more than 18% on the monthly chart.
Despite some notable upward trajectories that the aforementioned stocks have experienced throughout the year, exercising caution and refraining from trading them in the immediate future is a prudent move.
As market conditions continue to evolve, staying vigilant and informed remains key for investors navigating the ever-shifting landscape.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.