3 Meme Stocks You Should Sell Before They Slide Even Further

Markets have gone through a phase where it was easy to make money. Given macroeconomic and geopolitical headwinds, we are now in a phase where rigorous stock scrutiny is required. There will always be opportunities to make money, but investors must avoid purely speculative bets. In this column, I focus on the meme stocks to sell.

One important aspect I considered when selecting stocks to sell is the lack of positive growth catalysts. In addition, the meme stocks to sell represent companies with weak fundamentals. It is worth noting that these ideas are already in a downtrend. However, investors should not assume that the stock is oversold and a value pick.

The likelihood of a meme euphoria like we saw in 2021 is low, meaning that purely speculative ideas won’t soar. I would instead focus on high-quality growth stocks for the portfolio. So let’s discuss three fundamentally weak stocks you should sell.

These are the meme stocks to sell; they represent companies with weak fundamentals and a lack of growth momentum.

Lucid Group (LCID)

Lucid Group (NASDAQ:LCID) has fallen 54% over the past 12 months due to weak sales and cash burn. Although LCID stock has seen some recovery recently, I believe this is an opportunity to sell.

Recently, Lucid announced a $1.5 billion funding commitment from Ayar Third Investment Company. In addition, the company ended the second quarter of 2024 with a cash buffer of $4.28 billion. However, a strong cash buffer is not a sufficient reason to be optimistic about Lucid.

It is worth noting that Lucid reported an operating loss of $1.5 billion for the first six months of 2024. During the same period, operating cash flow was $1 billion.

With delivery growth remaining sluggish, cash burn is unlikely to decline significantly. I wouldn’t be surprised if Lucid needs to add more liquidity over the next 18 to 24 months. Given the intense industry competition, I would avoid LCID stock.

GameStop (GME)

GameStop (NYSE:GME) has already seen two major price increases in 2024 followed by a sharp correction. Given weak fundamentals, it is best to stay away from GME shares. The stock may crash if the broader markets correct by 5% or 10% as it is a purely speculative bet.

From a fundamental perspective, there does not seem to be any catalyst to consider investing in GME stock. For the first quarter of 2024, the company reported a sharp year-over-year decline in revenue to $882 million. In conjunction with the decline in revenue, adjusted EBITDA losses also increased slightly year-over-year. In addition, cash flow from operations was $110 million.

It’s worth noting that GameStop ended the quarter with a $1.1 billion cash buffer. Cash usage remains key. However, given the ongoing cash burn, I’m not optimistic, and macro headwinds will likely cause revenue growth to continue to decline.

ChargePoint Holdings (CHPT)

ChargePoint Holdings (NYSE:CHPT) has fallen 77% over the past 12 months. Even after the big correction, I remain bearish on CHPT stock. I wouldn’t be surprised if there is another 30-40% correction from current levels over the next 12 months.

There are two major negatives related to the company. First, ChargePoint reported a decline in revenue to $107 million for the first quarter of 2024. This is the second consecutive quarter of declining revenue and is a cause for concern.

In addition, the electric vehicle charging station company reported an operating loss of $67 million for the first quarter. As a percentage of revenue, operating losses have increased. Markets would have remained optimistic if the revenue decline had been accompanied by a significant margin increase. However, the current scenario is alarming and from an investment perspective, there are better electric vehicle charging station stocks.

At the time of publication, Faisal Humayun did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.