Rising inflation and the possibility of further interest rate hikes have weighed on investors’ sentiment so far. According to statements from two policymakers, the Federal Reserve is about to announce another sharp interest rate hike this month and maybe one in September as well, even if it results in an economic slowdown.
“I’m definitely in support of doing another 75 basis point hike in July, probably 50 in September, and then after that we can debate whether to go back down to 25s,” Fed Governor Christopher Waller told the National Association for Business Economics.
The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have all witnessed their worst first half to a year in several decades. According to former IMF Chief Economist Ken Rogoff, it is “almost impossible” for the Fed to bring down inflation without tipping the US economy into a recession.
Since the macroeconomic headwinds are not expected to ease anytime, Robinhood Markets, Inc. (HOOD), Frontier Group Holdings, Inc. (ULCC), and Warby Parker Inc. (WRBY) could be good short-sell candidates given their weak fundamentals. These stocks have also been recently downgraded to Strong Sell in our proprietary rating system.
Robinhood Markets, Inc. (HOOD)
Headquartered in Menlo Park, California, HOOD operates as a financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds (ETFs), options, gold, and cryptocurrencies. The company also offers various learning and education solutions comprising Snacks; Learn; Newsfeeds; lists and alerts; and offers First trade recommendations.
HOOD’s loss before income taxes amounted to $1.43 billion for the first quarter ending March 31, 2022, while its net loss came in at $1.45 billion. The company’s loss per share stood at $6.26 over the period.
Analysts expect HOOD’s consensus EPS to remain negative in the second quarter ending June 2022. The stock has declined 49.3% year-to-date and 78.5% over the past nine months.
HOOD’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
HOOD is rated an F for Stability and Sentiment and a D for Value. Within the F-rated Software – Application industry, it is ranked #140 of 156 stocks.
To see additional POWR Ratings for Quality, Growth, and Momentum for HOOD, Click here.
Frontier Group Holdings, Inc. (ULCC)
Headquartered in Denver, Colorado, ULCC is a low-fare airline company that provides passenger air transportation. The company operates an airline that serves approximately 120 airports throughout the United States and international destinations in the Americas.
For the first quarter ended March 31, 2022, ULCC’s operating loss increased 66% year-over-year to $153.00 million. Its net loss grew 33% from its year-ago value to $121.00 million, while its loss per share increased 21.7% year-over-year to $0.56.
The stock has slumped 6.9% over the past three months. Analysts expect ULCC’s EPS to remain negative in fiscal 2022.
ULCC’s poor prospects are also apparent in its POWR Ratings. The stock has an overall F rating, which equates to a Strong Sell. It has a D grade for Sentiment, Stability, and Value. ULCC is ranked #29 of 31 stocks in the F-rated Airlines industry.
Click here to see the additional POWR Ratings for ULCC (Quality, Growth, and Momentum).
Warby Parker Inc. (WRBY)
WRBY provides eyewear products. It offers eyeglasses, sunglasses, light-responsive lenses, blue-light-filtering lenses, and contact lenses, as well as accessories, including cases, lenses kit with anti-fog spray, pouches, and anti-fog lens spray. The company also directly provides eye exams and vision tests to consumers through its retail stores, website, and mobile apps.
WRBY’s loss from operations stood at $33.74 million compared to a profit of $3.02 million in the previous period. Its net loss stood at $34.13 million compared to a net profit of $3.01 million in the prior-year quarter. The company’s loss per share increased 900% from its year-ago value to $0.30. The stock has plunged 4.5% over the past month.
WRBY’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. It has an F grade for Sentiment and a D grade for Stability and Value. WRBY is ranked #142 of 149 stocks in the D-rated Medical – Devices & Equipment industry.
Click here to see the additional POWR Ratings for WRBY (Quality, Growth, and Momentum).
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REVISED: 2023 Stock Market Outlook (includes top 7 picks)
HOOD shares fell $0.17 (-1.89%) in premarket trading Monday. Year-to-date, HOOD has declined -49.32%, versus a -17.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...
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