July 12, 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:
Joby Aviation (JOBY)
Joby Aviation epitomizes the dangers of investing in speculative technology companies whose business models remain unproven after years of development and massive capital investment. Despite going public nearly four years ago with extraordinary growth projections, the eVTOL aircraft manufacturer has essentially gone nowhere, trading around $12 compared to its $10.62 IPO price. The company’s spectacular failure to meet pre-merger estimates reveals the gulf between promotion and reality: management predicted $131 million in 2024 revenue, $721 million in 2025, and $2.05 billion by 2026, but delivered only $136,000 in actual 2024 revenue while burning through $608 million in losses.
The fundamental challenges facing Joby extend far beyond typical startup growing pains to structural issues that threaten the entire eVTOL market premise. With FAA approval for commercial passenger flights not expected until late 2025 or early 2026, the company faces at least another 18 months of minimal revenue generation while continuing to hemorrhage cash. Even analyst projections for 2025 revenue of just $2 million underscore how far reality has diverged from initial promises. The gross margin of negative 32,563% reveals a business model where every dollar of revenue costs over $325 to generate – a mathematical impossibility for sustainable operations.
At a $10 billion market capitalization despite negligible revenue, Joby trades at 45 times projected 2027 revenue compared to competitor Archer Aviation’s 15 times multiple. This valuation premium appears increasingly unjustifiable given Joby’s execution failures and the technological uncertainties still facing eVTOL aircraft adoption. While the company has secured funding through Toyota partnerships and maintains $813 million in cash, share dilution has already increased 31% since the IPO, with more equity dilution likely necessary to reach profitability. For investors seeking exposure to urban air mobility themes, Joby represents a classic situation where compelling narratives cannot overcome fundamental business model flaws and extreme valuation disconnects from financial reality.
Wolfspeed (WOLF)
Wolfspeed presents one of the most dangerous investment traps in the current market, as recent speculative rallies mask the mathematical reality that existing shareholders face near-total value destruction through the company’s bankruptcy reorganization process. The silicon carbide manufacturer’s recent surge from $0.40 to over $3 per share likely represents a short squeeze rather than fundamental improvement, as creditors holding over 97% of senior secured notes have already agreed to terms that will leave current shareholders with only 3-5% of the restructured company. This prepackaged bankruptcy is expected to complete by the end of Q3 2025, making any current investment a speculation on short-term volatility rather than long-term value creation.
The operational disasters that led to Wolfspeed’s bankruptcy illustrate the dangers of companies making massive capital allocation mistakes while facing technological and competitive challenges. The company’s $5 billion bet on vertical integration through facilities in North Carolina and New York has been an unmitigated disaster, burning through $1.5 billion in cash during the first nine months of the fiscal year while achieving negative gross margins of 17%. This means Wolfspeed loses money on every sale before considering operating expenses, a fundamental breakdown that aggressive pricing from Chinese competitors and slower-than-expected EV adoption have only exacerbated.
Even post-bankruptcy projections appear optimistic given the company’s track record of execution failures. Management’s forecast of $200 million in unlevered operating cash flow for fiscal 2026 excludes interest payments that will still consume approximately $95 million annually even after the 60% reduction. The technical challenges of transitioning to 200mm wafers add additional execution risk, as larger wafers typically produce higher defect rates during manufacturing transitions. For current shareholders, the appointment of restructuring veteran Gregor van Issum as CFO actually reinforces the bankruptcy timeline rather than providing salvation. With share dilution inevitable and equity recovery minimal, Wolfspeed represents a classic situation where any continued holding represents speculation rather than investment, particularly when the reorganized company will likely offer better entry points post-bankruptcy for those believing in the long-term silicon carbide opportunity.
Bloom Energy (BE)
Bloom Energy demonstrates how government subsidies can create artificial investor enthusiasm for companies whose fundamental valuations remain disconnected from business reality. J.P. Morgan’s upgrade to overweight with a $33 price target, citing the maintenance of 48E tax credits in President Trump’s legislative package, triggered speculative buying that ignores the stock’s extreme valuation metrics. At current levels around $25, Bloom trades at over 1,000 times earnings despite minimal GAAP profits and a price-to-free cash flow ratio of 73 based on just $77 million in annual free cash flow generation.
The fundamental issue with Bloom Energy is that government incentives have become essential to the investment thesis rather than merely helpful supplements to an otherwise viable business model. While the company achieved GAAP profitability in Q4 2024, the modest scale of these profits highlights how dependent the hydrogen fuel cell manufacturer remains on external support for financial viability. The 31.79% gross margin provides some operational cushion, but the company’s ability to scale profitably without substantial government assistance remains unproven after years of operations.
Most concerning is the market’s willingness to pay extreme premiums based on speculative government policy support rather than demonstrated business model sustainability. Even if analysts’ 25% annual growth projections prove accurate, the current valuation multiples require near-perfect execution and continued political support for alternative energy subsidies. With a $6 billion market capitalization supported primarily by policy speculation rather than operational excellence, Bloom Energy represents a classic example of how government-dependent business models create investment risks that extend far beyond company-specific factors. For investors seeking clean energy exposure, the combination of extreme valuations and political dependency suggests waiting for more attractive entry points or considering companies with stronger fundamental business models that don’t require ongoing subsidy support for viability.
Bottom Line
This week’s featured companies illustrate how speculative investments can persist at irrational valuations for extended periods while fundamental business challenges mount in the background. Joby Aviation’s failure to commercialize eVTOL technology after massive investment, Wolfspeed’s impending equity destruction through bankruptcy reorganization, and Bloom Energy’s dependence on government subsidies to justify extreme multiples all represent situations where current prices appear disconnected from realistic business outcomes. For prudent investors, these examples highlight the importance of distinguishing between compelling technology stories and viable investment opportunities, particularly when valuations assume best-case scenarios across multiple uncertain variables including regulatory approval, technological execution, and political support.
