The general stock market is concluding 2023 on a positive note, propelled by specific equities that have spearheaded an end-of-year rally. Significantly, these gains have enabled several stocks to recover from losses incurred in 2022.
On the flip side, other select stocks have struggled throughout the year, grappling with macroeconomic factors such as interest rates and underlying internal business challenges. In this context, Finbold has identified the following three stocks that underperformed in 2023, highlighting the driving factors contributing to their disappointing performance.
Moderna (NASDAQ: MRNA)
In 2023, Moderna Inc. (NASDAQ: MRNA) recorded losses to the point of failing to capitalize on the overall end-year rally by key equities in anticipation of a possible Federal Reserve interest rate cut. The disappointing stock performance is rooted in financial setbacks, reduced sales, the need for manufacturing adjustments, and the formidable challenges established competitors face in the pharmaceutical landscape.
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Indeed, from the financial front, Moderna has been characterized by losses. For instance, the pharmaceutical giant recorded a substantial net loss of $3.6 billion in the third quarter. The disappointment stems from a considerable write-down linked to surplus COVID-19 vaccine doses, the sole marketable product in Moderna’s portfolio in recent years. To address this, the company announced plans to scale back production, incurring non-cash charges of $3.1 billion.
Moderna forecasts a further decline in Spikevax sales and predicts total sales of $4 billion for the next year, encompassing both Spikevax and a respiratory syncytial virus (RSV) vaccine candidate. The RSV candidate faces stiff competition from established vaccines like Arexvy from GlaxoSmithKline and Pfizer’s (NYSE: PFE) Abrysvo.
Moreover, Moderna’s late-stage pipeline, with several programs in advanced stages of clinical trials, is expected to elevate research and development expenses. This expenditure comes when the company is projecting modest total sales, raising concerns among investors about the viability of its future revenue streams.
As of the latest data, Moderna is valued at $99.45, reflecting a stark year-to-date loss of almost 45%.
Dish Network (NASDAQ: DISH)
In 2023, Dish Network (NASDAQ: DISH) was tumultuous, marked by a sharp decline in its services and financial standing. The root causes of this predicament are multifaceted. Notably, subscriber numbers for pay TV experienced a substantial 11.8% decrease in the third quarter, with losses of 6.7 million in Dish’s satellite service and 2.1 million in Dish’s Sling streaming service. The quarter witnessed a net pay TV loss of 64,000, with satellite net losses amounting to 181,000.
Dish’s strategic shift towards becoming a wireless mobile provider has been evident, potentially overshadowing its traditional pay TV offerings. This shift is underscored by the resignation of CEO Erik Carlson and a merger with EchoStar, aimed at creating a formidable wireless service provider to contend with industry giants AT&T and Verizon.
Financially, Dish has faced a daunting scenario. The company’s stock plummeted by about 60% over the past year. The third quarter saw a reported net loss of $139 million, falling short of analyst expectations for earnings per share. The burden of approximately $21 billion in debt, with $5 billion maturing in 2024 and 2025, raises concerns about Dish’s ability to navigate refinancing amidst rising interest rates.
Operational challenges include financing the wireless broadband buildout, exacerbated by declining businesses in other segments. A first-quarter outage and cyberattack, though sparing customer information, may have accelerated subscriber churn and negatively impacted results.
By press time, Dish was trading at $5.77 with YTD losses of about 59%.
Walgreens Boots Alliance (NASDAQ: WBA)
Walgreens Boots Alliance, Inc. (NASDAQ: WBA) has faced a substantial decline in its stock in 2023, primarily attributed to a series of challenges impacting its business outlook. Firstly, the company experienced an earnings miss, prompting a downward revision in its full-year 2023 guidance and a dampened preliminary outlook for 2024.
This downturn includes challenging consumer and macroeconomic conditions and a significant reduction in demand for COVID-related products and services that collectively exerted pressure on margins.
In response to the adverse market conditions, Walgreens management decided to raise its cost savings program target and implement capital spend reductions. The aim is to optimize profitability, particularly in its U.S. Healthcare segment, amidst declining investor confidence.
Furthermore, Walgreens is shifting strategically towards a more substantial presence in healthcare. This includes plans to open hundreds of health clinics at select pharmacy locations, a long-term strategy capitalizing on its reputation as a trusted neighborhood pharmacy. This shift comes with risks, especially considering the substantial investments involved.
Walgreens is also grappling with cash depletion and losses. In the fourth quarter of fiscal 2023, its cash and marketable securities dwindled to approximately $740 million, down significantly from nearly $2.5 billion a year earlier. The company reported a net loss of $208 million in the same quarter, highlighting challenges in maintaining profitability amid substantial investments in healthcare expansion and dividend payouts to investors.
While Walgreens projects a breakeven point for its U.S. healthcare business in fiscal 2024, uncertainties remain about the profitability of this expansion. In the meantime, the stock is trading at $26.11, a rate representing YTD losses of 29%.
It’s worth noting that although the highlighted stocks recorded losses in 2023, they still possess notable fundamentals that could potentially inspire a rally in 2024.
