Tech stocks have come roaring back in 2023. But after the stunning rebound, some tech names have little room to run. In addition to industry-specific concerns, the technology sector faces headwinds from rising interest rates and a central bank that hasn’t finished its fight against inflation. As such, now seems like a good time to lock in gains on certain tech stocks that have rallied sharply this year. In particular, these three tech stocks look vulnerable and may see severe downside in the coming days and weeks.
Check Point Software Technologies (CHKP)
Check Point develops a range of cybersecurity products and services globally. In terms of financial performance, the company has delivered mixed results. Although it has maintained bottom-line profitability for over two decades, Check Point’s revenue growth over the past five years has settled in the low single-digit range.
CHKP shares are down 1% YTD and are only up a fraction of a percent over the past twelve months. “Amid a tech sub-vertical characterized by rapid growth, this lukewarm share performance stands out like a blemish.
Palantir Technologies Inc (PLTR)
Palantir Technologies is, a black-box consulting company, has been scrutinized by The Bear Cave for allegedly posing as an AI powerhouse while primarily functioning as an overhyped data consultant. Despite notable contracts, PTLR’s lack of innovative work raises concerns. The current valuation of PLTR stock at nearly 15 times revenues and 68 times forward earnings is high for a data management and consulting company. Without PLTR’s utilization of impressive AI applications, however, the recent 90% stock gain is expected to diminish rapidly.
PLTR isn’t much different. It’s up year-to-date by 9.07% but has a negative ROE of -10.04% and a risky 2.84 beta. PLTR showed TTM revenue of $1.98 billion and lost $225 million on its -12.87% profit margin. Overvalued PLTR is a stock we would’ve been wise to grab a part of several months ago, much like AFRM and AI; this all happened so damn fast. With a negative cash flow of -$423.74 million and a whopping 10-day average trading volume of 120.48 million shares (people are on to this one), PLTR has a median price target of $8.25, with a high of $18 and a low of $5. This new range for PLTR indicates a downside of anywhere from -48% to -69%. PLTR has six Hold ratings and seven Sell ratings.
Meta Materials (MMAT)
Semiconductor company Meta Materials develops and produces functional materials and nanocomposites, particularly in lithium battery materials. The micro-cap company is losing far more money than it’s bringing in. In the fourth quarter MMAT reported revenues of $1.4 million and operating expenses of $24.8 million. The company posted a net earnings loss of $79.1 million for the entire year.
Not to mention, the company is embroiled in litigation on accusations of involvement in “spoofing, naked short selling, market manipulation, and fraud.” Meta Materials’ share price is down 83% this year, falling to less than 20 cents per share.
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