May 17, 2025
Every successful investor knows a painful truth: knowing when to sell is often more critical than knowing what to buy.
While financial media overwhelmingly focuses on buying opportunities, our research consistently identifies companies facing significant headwinds that merit serious consideration for selling. These aren’t just stocks underperforming the market; they’re businesses confronting structural challenges, deteriorating fundamentals, or carrying valuations disconnected from financial reality.
What you won’t find here: reactionary calls based on short-term price movements or headline volatility. Each company on this list has been thoroughly analyzed across multiple metrics that historically precede substantial declines.
Smart investors understand that portfolio management requires both addition and subtraction. Sometimes the best investment decision is to redeploy capital away from troubling positions before problems fully materialize in the share price.
This week’s watchlist highlights stocks showing critical weaknesses that demand immediate attention:
UnitedHealth Group (UNH)
UnitedHealth Group faces a potentially existential crisis as the Department of Justice’s healthcare fraud unit conducts a criminal investigation into possible Medicare fraud – a development that sent shares plummeting 19.2% in early Thursday trading before recovering slightly. This criminal probe comes on top of an existing civil fraud investigation and follows the abrupt departure of CEO Andrew Witty for “personal reasons” just days earlier. The confluence of these events creates a perfect storm of governance, legal, and operational concerns that has obliterated shareholder confidence in what was once considered a blue-chip healthcare company.
The magnitude of UnitedHealth’s market value destruction is historic – shares have collapsed 50% in just 23 trading days, the most severe drop for an S&P 100 company since Netflix’s 54% decline in May 2022. Now trading at $291.30, down from a 52-week high of $630.73, UNH has shed approximately $265 billion in market capitalization during this freefall. Perhaps most telling is the explosion in trading volume to 71.1 million shares versus the 11.3 million average, indicating widespread institutional abandonment of positions.
Beyond the legal investigations, UnitedHealth faces mounting operational challenges including rising healthcare costs that are pressuring margins, which recently forced the company to cut its full-year guidance. The 2.88% dividend yield provides minimal compensation for the extraordinary legal, regulatory, and business risks now facing the company. While UnitedHealth remains a massive enterprise with significant resources, history suggests that healthcare companies facing fraud investigations often experience protracted periods of underperformance as legal proceedings unfold over years rather than months. For investors who still view this as a temporary setback, the unprecedented speed and severity of the decline combined with the open-ended nature of criminal investigations presents a compelling case for moving to the sidelines until greater clarity emerges.
New Fortress Energy (NFE)
New Fortress Energy exemplifies a company approaching potential financial collapse as staggering losses force desperate asset sales to stave off insolvency. The LNG company’s 62.6% single-day implosion followed a catastrophic earnings report showing a $0.73 per share loss versus the expected $0.05 loss. Management’s attempt to highlight “one-time events” that might boost future earnings rang hollow given the company’s inability to source LNG at viable prices for its Latin American power operations – a fundamental problem with its business model rather than a temporary setback.
The company’s last-ditch attempt to remain afloat involves selling its Jamaican LNG import terminal, offshore floating storage, and other assets to Excelerate Energy for approximately $1 billion, with $325 million earmarked for debt reduction. However, this measure appears woefully inadequate given New Fortress’s staggering $9 billion debt burden (net of cash) and catastrophic $3.2 billion annual cash burn rate. Despite posting occasional GAAP profits, the company has never generated positive free cash flow in its history, suggesting a fundamentally flawed business model.
Now trading at just $2.63, down from a 52-week high of $27.65, New Fortress’s market capitalization has collapsed to just $729 million – less than 10% of its debt load. The extraordinary trading volume of 40.6 million shares versus the 9.2 million average reflects institutional panic selling. While the 30.29% gross margin and 3.76% dividend yield might appear attractive on paper, these metrics become irrelevant in the face of potentially terminal financial distress. With insufficient asset sales to meaningfully address its debt and no path to sustainable free cash flow, New Fortress appears to be entering a death spiral where each quarter brings the company closer to potential restructuring. For investors still holding positions, the window for orderly exits may be rapidly closing.
Luminar Technologies (LAZR)
Luminar Technologies demonstrates how quickly corporate governance issues can devastate a company’s market value and future prospects. The lidar manufacturer’s shares tumbled 17.6% following the abrupt resignation of founder, chairman, and CEO Austin Russell “following a code of business conduct and ethics inquiry” by the board’s audit committee. While the company emphasized that the matter does not impact financial results, the sudden removal of the visionary behind the company’s products and strategy creates an enormous leadership vacuum that may prove impossible to fill adequately.
The timing of this leadership crisis could hardly be worse for Luminar. The company is burning cash at an alarming rate while operating with negative gross margins of -34.07%, suggesting fundamental problems with its business model even before losing its chief strategist. Now trading at $4.72, down from a 52-week high of $32.70, Luminar’s market capitalization has shrunk to just $214 million – a valuation that provides minimal cushion against operating losses while the new leadership team gets up to speed.
Compounding these internal challenges, the broader automotive industry – Luminar’s target market – is reducing spending amid uncertainty about the Trump administration’s tariff plans. The combination of corporate governance issues, negative gross margins, and deteriorating end markets creates a perfect storm for a company already in a precarious financial position. With trading volume at 4.8 million shares versus the 2.5 million average, institutional investors appear to be heading for the exits. Given the numerous uncertainties now facing Luminar without its founder at the helm, investors should strongly consider whether the risk-reward profile still makes sense for their portfolios.
Bottom Line
This week’s featured companies represent particularly severe examples of how quickly corporate fortunes can deteriorate when multiple negative factors converge. UnitedHealth faces the specter of criminal fraud investigations while grappling with rising healthcare costs, New Fortress Energy confronts an unsustainable debt load that asset sales can’t fix, and Luminar Technologies must navigate a leadership crisis amid challenging market conditions. In each case, the dramatic price declines and extraordinary trading volumes suggest institutional investors are rapidly reassessing risk exposures. For retail investors still holding these positions, these dramatic moves should serve as serious warning signs that warrant immediate reconsideration before potential additional downside materializes.
