The Fed’s response to 40-year high inflation has been a similarly abrupt increase in interest rates this year. Though the Fed has indicated a smaller magnitude of rate hikes ahead, their fight against inflation is far from over.
Economic uncertainty has continued to loom large, given the sky-high inflation and consecutive rate hikes, resulting in the Consumer Confidence Index of the Conference Board falling to 100.2 in November, down from 102.2 in October. The index is at its lowest level since July.
Moreover, in its world economic outlook, Deutsche Bank AG (DB) published that the bear market rally in equity markets will continue into next year. The bank also expects a recession to hit the U.S. economy by mid-2023.
Amid bleak market prospects, investing in fundamentally weak stocks SoFi Technologies, Inc. (SOFI), Ginkgo Bioworks Holdings, Inc. (DNA), Opendoor Technologies Inc. (OPEN), and Camber Energy, Inc. (CEI) might not be ideal now. Moreover, these stocks have been slumping significantly over the past months.
SoFi Technologies, Inc. (SOFI)
SOFI is a digital financial services company. It operates through lending, financial services, and technology platform segments. The company’s lending segment offers student loans and personal and home loans.
In terms of its forward Price/Sales, the stock is currently trading at 2.67x, which is 4.1% lower than the industry average of 2.79x.
SOFI’s net loss rose 147% year-over-year to $74.21 million in the third quarter that ended September 30, 2022. The company’s non-interest expense increased 65.1% year-over-year to $498.43 million. Its loss per share increased 80% year-over-year to $0.09.
Analysts expect SOFI’s EPS for the current year ending December 2022 to remain negative.
Over the past year, the stock has declined 74% to close the last trading session at $4.40. It has declined 13.7% over the past month.
SOFI’s weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an F grade for Stability and Quality and a D for Value and Momentum. It is ranked #101 out of 104 stocks in the F-rated Financial Services (Enterprise) industry.
Click here to see the other ratings of SOFI for Growth and Sentiment.
Ginkgo Bioworks Holdings, Inc. (DNA)
DNA develops a platform for cell programming. Its platform is used to program cells to enable the biological production of products, such as novel therapeutics, food ingredients, and chemicals derived from petroleum. The company serves various end markets, including specialty chemicals, agriculture, food, consumer products, and pharmaceuticals.
Its forward EV/Sales multiple of 3.84 is 162.8% higher than the 1.46 industry average. In terms of its forward Price/Sales, DNA is trading at 6.47x, 492.8% higher than the industry average of 1.09x.
For the third quarter of fiscal 2022 ended September 30, DNA’s total revenues decreased 14.4% year-over-year to $66.40 million. The company’s loss from operations widened 2,348.3% year-over-year to $653.02 million. It reported a net loss of $669.06 million, rising 553.3% year-over-year.
DNA’s revenue for the fiscal 2022 fourth quarter ending December 2022 is expected to decrease 40.7% year-over-year to $88 million. The company is expected to report a loss per share of 0.24 during the current quarter. Moreover, the company failed to surpass its consensus EPS estimates in each of the trailing four quarters.
The stock has declined 82.3% over the past year to close the last trading session at $1.80. It has declined 29.1% over the past month.
DNA’s weak prospects are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
The stock has an F grade for Stability and Sentiment and a D grade for Value, Momentum, and Quality. Within the Biotech industry, it is ranked last among 376 stocks.
Beyond what we stated above, we also have DNA’s ratings for Growth. Get all DNA ratings here.
Opendoor Technologies Inc. (OPEN)
OPEN operates a digital platform for residential real estate in the United States. The company’s platform allows consumers to buy and sell a home online. In addition, it offers title insurance and escrow services.
OPEN’s gross loss came in at $425 million for the third quarter that ended September 30, 2022, compared to a gross profit of $202 million in the year-ago period. Its net loss came in at $928 million, up significantly year-over-year, while its loss per share came in at $1.47, up substantially year-over-year.
Street expects OPEN’s revenue to decrease 36.5% year-over-year to $2.43 billion for the fourth quarter ending December 2022. Its EPS is expected to fall 177.6% year-over-year to negative $0.86 for the same quarter. It missed EPS estimates in three out of four trailing quarters.
The stock has lost 91.6% over the past year to close the last trading session at $1.32. It has fallen 19.5% over the past month.
OPEN has an overall F rating, equating to a Strong Sell in our POWR Ratings system.
It has an F grade for Growth, Stability, and Sentiment and a D for Momentum and Quality. It is ranked #39 out of 41 stocks in the F-rated Real Estate Services industry.
In addition to the ratings above, we have also rated OPEN for Value. Get all OPEN ratings here.
Camber Energy, Inc. (CEI)
CEI operates as an independent oil and natural gas company. It acquires, develops, and sells crude oil, natural gas, and natural gas liquids from various known productive geological formations in Kansas, Louisiana. It provides energy and power solutions to industrial and commercial users.
On November 11, CEI disclosed that it had received a letter from NYSE on November 7 that notified the company that its securities had been selling at a low price per share for a long period of time. The company has been advised to demonstrate sustained price improvement or effect a reverse stock split no later than May 7, 2023, to remain listed at NYSE.
CEI’s trailing 12-month Price/Sales multiple of 53.14x is significantly higher than the 1.27x industry average. Its trailing 12-month EV/Sales multiple is trading at 156.01x, which is remarkably higher than the industry average of 1.86x.
For the quarter ended September 30, CEI’s loss from operations rose 32.8% year-over-year to $1.22 million. Its net loss attributable to common shareholders came in at $23.28 million and $0.05 per share. The company’s total operating expenses increased 34.9% from its prior-year quarter to $1.38 million.
CEI has declined 27.5% over the past month and 89.4% year-to-date to close the last trading session at $0.09.
CEI’s poor prospects are reflected in its overall rating of D, which translates to Sell in our POWR Ratings system.
It has a grade of D for Stability and Sentiment. Among the 101 stocks in the Energy – Oil & Gas industry, CEI is ranked #90.
To access the additional POWR Ratings for Value, Quality, Growth, and Momentum for CEI, click here.
SOFI shares were trading at $4.34 per share on Friday morning, down $0.06 (-1.36%). Year-to-date, SOFI has declined -72.55%, versus a -15.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More…