June 28, 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:
Rigetti Computing (RGTI)
Rigetti Computing exemplifies the dangers of investing in speculative technology companies that burn cash while facing overwhelming competition from tech giants. Despite the quantum computing specialist’s dramatic run from roughly $1 to over $21 per share following breakthrough error correction news, the stock has surrendered 48% of those gains as reality sets in about the company’s fundamental challenges. With annual revenue of just $10.8 million in 2024 (down from $12 million in 2023) and net losses nearly tripling to $201 million, Rigetti operates an unsustainable business model that requires constant equity dilution to survive.
The competitive landscape facing Rigetti is particularly daunting, with Google Quantum AI, IBM, Nvidia, and even the Chinese government pursuing similar superconducting quantum technologies. Notably, the very breakthrough that sparked Rigetti’s stock surge came from Google’s research rather than Rigetti’s own efforts, highlighting the company’s position as a follower rather than a leader in this emerging field. Nvidia CEO Jensen Huang’s comment that practical quantum systems could be “20 years away” provides a sobering reality check for investors betting on near-term commercialization of quantum computing applications.
Perhaps most concerning is Rigetti’s reliance on continuous share dilution to fund operations, with outstanding shares increasing by 61.7% over the past year. At $11.09 with a market capitalization of $3 billion despite minimal revenue and massive losses, the stock trades at speculative multiples that assume breakthrough commercial success. The company’s negative 15.18% gross margin reveals fundamental operational challenges even before considering R&D expenses of $50 million against $10 million in sales. With trading volume often spiking during both rallies and selloffs, Rigetti exhibits the classic volatility patterns of a speculative play rather than a sustainable investment. For investors seeking exposure to quantum computing, the combination of dilutive financing, overwhelming competition, and extended commercialization timelines suggests considering exits before the next inevitable downturn materializes.
Winmark (WINA)
Winmark faces a perfect storm of demographic headwinds and valuation concerns that threaten its premium stock price despite the company’s historically strong business model. The resale retailer’s Plato’s Closet brand, which targets 18-24 year-old consumers, is experiencing significant pressure as this crucial demographic reduces spending by 13% year-over-year according to Circana market research. Particularly damaging is the 11% decline in apparel spending and 18% drop in accessories purchases – categories that directly impact Winmark’s core business segments.
The fundamental challenge facing Winmark extends beyond cyclical spending patterns to structural issues affecting young adults, including resumed student loan payments, a challenging job market, and mounting credit card pressures. These factors create sustained rather than temporary headwinds for the company’s target demographic. Despite the company’s impressive 96.11% gross margin reflecting its asset-light franchise model, Winmark’s operational performance has already shown weakness with profits declining in 2024 and growth projections of only 6-7% for the next two years.
At $375.03 per share with a market capitalization of approximately $1 billion, Winmark trades at 33 times trailing earnings and 30 times free cash flow – valuations that require sustained growth to justify. The modest 0.97% dividend yield provides minimal compensation for these elevated multiples, particularly when the underlying business faces demographic pressure. With average trading volume suggesting limited liquidity and institutional interest, Winmark appears vulnerable to significant corrections if spending trends among young consumers continue deteriorating. For investors holding positions, the combination of premium valuations and structural challenges facing the target demographic creates an asymmetric risk profile favoring downside rather than upside potential in the current environment.
QuantumScape (QS)
QuantumScape’s 13.53% Friday decline following a 50% weekly surge demonstrates the extreme volatility inherent in binary technology bets where investors must choose between massive gains or total loss scenarios. While the solid-state battery developer’s announcement of progress with its Cobra separator manufacturing process initially triggered explosive gains, the subsequent selloff reflects growing recognition that commercial viability remains highly uncertain despite technological advances. The company’s current $4 billion market capitalization against zero gross margin and no meaningful revenue streams represents pure speculation on future adoption possibilities.
The harsh reality facing QuantumScape investors is the extended timeline required for battery technology commercialization and automotive industry adoption. Even if the company’s solid-state battery technology proves superior to current lithium-ion solutions, the automotive industry’s conservative approach to new technologies means years of testing, validation, and production scaling before meaningful revenue could materialize. The extraordinary trading volume of 108.6 million shares versus the 18.6 million average indicates massive speculative interest rather than institutional conviction in the company’s near-term prospects.
Most sobering is QuantumScape’s history since going public through a SPAC merger in November 2020 – the stock remains down approximately 95% from its lifetime high despite this week’s impressive rally. This track record illustrates how speculative technology companies can destroy shareholder value even when achieving technical milestones. With no dividend, negative gross margins, and a business model that won’t generate meaningful cash flows for years, QuantumScape requires perfect execution across multiple variables including technology development, manufacturing scale-up, customer adoption, and competitive positioning. For investors considering or holding positions, the mathematical reality is stark: while success could generate exceptional returns, the probability-weighted outcome heavily favors substantial losses given the numerous execution risks and extended commercialization timeline facing this purely speculative investment.
Bottom Line
This week’s featured companies illustrate three distinct types of speculative investments that can destroy shareholder value despite compelling narratives. Rigetti Computing faces overwhelming competition and unsustainable cash burn in the quantum computing race, Winmark confronts demographic headwinds that undermine its premium valuation despite historically strong operations, and QuantumScape represents a binary technology bet with massive downside risk. In each case, current valuations appear to reflect optimistic scenarios that ignore fundamental challenges, competitive pressures, or extended commercialization timelines. For prudent investors, these situations highlight the importance of distinguishing between compelling technologies and viable investments, particularly when valuations assume best-case outcomes across multiple uncertain variables.
