The tech-heavy Nasdaq suffered an unpleasant start to the year, with a 3.3% decline on Jan. 5 as part of a broader market retreat. Although the Dow Jones Industrial Average marked another all-time high this week, the collapse by technology stocks, which are the most heavily weighted stocks in the benchmark index, left the S&P 500 in the red.
Furthermore, many experts believe that rising interest rates and inflation might mar the tech stocks’ growth this year. This notion is causing concern among the investors.
So, we believe it could be wise to avoid ultra-popular tech stocks Robinhood Markets, Inc. (HOOD), Meta Materials Inc. (MMAT), and Future FinTech Group Inc. (FTFT), whose fundamental strength is questionable.
Robinhood Markets, Inc. (HOOD)
Menlo Park, Calif.-based HOOD is a financial service platform that allows users to invest in stocks, exchange-traded funds (ETFs), options, gold, and cryptocurrencies. The company’s platform offers trading in U.S. listed stocks and ETFs and related options and American depositary receipts (ADRs), and cryptocurrency trading through its subsidiary, Robinhood Crypto, LLC (RHC). In addition, it offers various learning and education solutions.
Last month, The Schall Law Firm, a national shareholder rights litigation firm, filed a class-action lawsuit against HOOD for alleged violations of federal securities laws. According to the allegation, the company made false and misleading statements to the market. This case could negatively impact HOOD’s customers’ trust.
HOOD’s total net revenue increased 35.4% year-over-year to $364.92 million in the third quarter, ended Sept. 30, 2021. However, the company’s operating expenses grew 509.1% from its year-ago value to $1.72 billion. Its net loss rose significantly from its prior-year quarter to $1.32 billion. In addition, the company’s loss per share increased significantly year-over-year to $2.06.
HOOD has declined 28.9% in price over the past month and 62.9% over the past three months.
HOOD’s POWR Ratings are consistent with this bleak outlook. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an F grade for Sentiment and Growth. We have also graded HOOD for Quality, Value, Momentum, and Stability. Click here to access all of HOOD’s ratings. HOOD is ranked #165 of the 167 stocks in the F-rated Software – Applications industry.
Click here to check out our Software Industry Report Meta Materials Inc. (MMAT)
Headquartered in Dartmouth, Canada, MMAT is a smart material and photonics company that invents, designs, develops and manufactures various functional materials and nanocomposites. Its products include metaAIR, NANOWEB, and holoOPTIX. The company’s technology platform enables brands to deliver products in consumer electronics, 5G communications, health and wellness, aerospace, automotive, and clean energy.
Last month, Rosen Law Firm, a global investor rights law firm, began investigating potential securities claims on behalf of shareholders of MMAT in response to allegations that MMAT may have issued materially misleading business information to the investing public. The case could negatively impact the company’s share price in the near term.
During the third quarter, ended Sept. 30, 2021, MMAT’s total revenue increased 188.9% year-over-year to $572,610. However, the company’s total operating expenses grew 344.6% from its year-ago value to $12.02 million. Its net loss rose 342.6% from the prior-year quarter to $11.43 million. Also, the company’s loss per share increased 100% year-over-year to $0.04.
MMAT has declined 50.9% in price over the past three months and 65.9% over the past six months.
MMAT’s poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell in our proprietary rating system. Also, the stock has an F grade for Value, Quality, and Stability.
In addition to the POWR Rating grades I have just highlighted, one can see MMAT’s ratings for Growth, Sentiment, and Momentum here. MMAT is ranked #42 of 45 stocks in the B-rated Technology – Electronics industry.
Future FinTech Group Inc. (FTFT)
Headquartered in Beijing, China FTFT is a financial service and financial technology company that integrates blockchain and internet technology. The company operates through CCM Shopping Mall Membership; Sales of Goods; and other segments. FTFT also offers Chain Cloud Mall (CCM), an enterprise customer interactive and comprehensive shopping and sales service platform; NONOGIRL, a cross-border e-commerce platform; and DCON, a blockchain-based application incubator, and a digital payment system.
For the second quarter, ended June 30, 2021, FTFT’s revenue increased 1,607.8% year-over-year to $1.94 million. However, the company’s total operating expenses grew 10.3% from its year-ago value to $604,440. Its loss from operations rose 20.2% from the prior-year quarter to $533,080. Also, the company’s loss per share came in at $0.01.
FTFT’s stock price has declined 79.4% in price over the past nine months and 60.5% over the past six months.
It is no surprise that FTFT has an overall F rating, which equates to a Strong Sell in our POWR Rating system. Also, the stock has an F grade for Value, Stability, and Quality. Click here to see the additional POWR Ratings for FTFT (Momentum, Growth, and Sentiment). FTFT is ranked last of 78 stocks in the D-rated Technology – Services industry.
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HOOD shares were trading at $16.09 per share on Friday morning, up $0.51 (+3.27%). Year-to-date, HOOD has declined -9.40%, versus a -1.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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