December 20, 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:
Frontier Group (ULCC)
Frontier Group demonstrates how leadership instability compounds operational challenges facing budget carriers, with shares plummeting nearly 13% for the week following an SEC filing announcing the abrupt departure of CEO Barry Biffle, who will be replaced by President James Dempsey serving as interim CEO while Biffle remains with the company in an advisory capacity for just two weeks. The peculiarly brief advisory period raises uncomfortable questions about the circumstances surrounding Biffle’s exit, with management providing no meaningful explanation for the sudden leadership change at a time when the budget airline faces perhaps its most challenging operating environment in years. While management reaffirmed fourth-quarter guidance previously provided in early November, this affirmation does little to address the strategic questions facing a business model under assault from multiple directions as low-cost carriers struggle with rising costs that disproportionately impact their thin margins.
Budget airlines have been hit particularly hard by escalating labor and airport costs that force ticket price increases, yet these carriers operate in a highly price-competitive market where such increases immediately disadvantage them against network carriers like Delta Air Lines and United Airlines that can offset rising costs through premium cabin revenue and loyalty program monetization. This cost pressure manifested in Frontier’s third-quarter loss of $77 million, demonstrating how quickly profitability can evaporate when the budget carrier business model confronts expense inflation that cannot be fully passed through to price-sensitive customers. The catastrophic 1.93% gross margin reveals a business generating virtually no profit on ticket sales before accounting for operating expenses, creating an unsustainable situation where even modest cost increases or competitive price pressures can flip the company from marginal profitability to substantial losses.
In response to these structural headwinds, Frontier is attempting to follow the Delta and United premium and loyalty playbook by introducing first class seating and growing loyalty revenues while maintaining tight capacity control, yet this strategic pivot essentially abandons the low-cost carrier model that defined the company’s identity and competitive positioning. Trading at $5.00 per share at the time of writing with a market capitalization of approximately $1.1 billion, Frontier carries a valuation that assumes the company can successfully execute this challenging transformation despite lacking the network breadth, frequent flyer program scale, and brand positioning that allow network carriers to command premium pricing. The fundamental problem facing Frontier in 2025 involves cost per available seat mile excluding fuel growing faster than revenue per available seat mile, creating a profitability squeeze that no amount of capacity discipline can resolve if the trend persists. For investors seeking airline exposure, Frontier represents the worst positioning in the industry: a budget carrier whose cost structure no longer supports competitive pricing, attempting a premium transformation without the assets necessary for success, experiencing sudden CEO departure without explanation, and posting margins so thin that the business model appears structurally unprofitable in the current cost environment.
Oracle Corporation (ORCL)
Oracle confronts a full-blown financing crisis following reports that Blue Owl Capital has walked away from providing $10 billion in funding for a new Michigan data center, extending a multi-day selloff that has seen shares decline over 5% today alone as investors recognize the company may now struggle to secure financing from alternative sources on favorable terms. Blue Owl has served as a major partner in financing Oracle’s artificial intelligence infrastructure ambitions, making this financing failure particularly concerning as it suggests even specialized infrastructure lenders question whether Oracle’s aggressive expansion strategy generates returns sufficient to service the mounting debt obligations. The failed deal validates growing market concerns about Oracle’s creditworthiness, with the company’s bonds trading at levels comparable to junk despite retaining investment-grade ratings from traditional credit rating agencies, while credit default swaps—essentially insurance against default—have reached levels not seen since the great financial crisis.
This financing rejection comes just days after Oracle reported second-quarter results showing capital expenditures accelerating to $12 billion for the quarter, creating a situation where the company needs continuous access to debt markets to fund expansion yet faces increasing skepticism from potential lenders about its ability to service this debt if AI infrastructure demand moderates. The divergence between Oracle’s official investment-grade credit ratings and the junk-level pricing of its bonds in secondary markets reflects sophisticated investors’ recognition that the company’s highly leveraged position creates genuine default risk, with the rapid AI infrastructure buildout requiring Oracle to issue expensive debt at precisely the moment when its ability to generate cash flows sufficient for debt service comes into question. The fact that Blue Owl, which specializes in alternative lending and infrastructure finance, declined to participate in the Michigan data center funding suggests the economics of Oracle’s AI expansion fail to meet even alternative lenders’ risk-adjusted return requirements.
Trading at around $194 per share with a market capitalization of approximately $517 billion, Oracle carries a valuation assuming the company successfully navigates its transformation from software provider to AI infrastructure operator despite accumulating debt levels that bond markets increasingly price as distressed. The company’s reliance on expensive debt to fund rapid AI data center construction represents an extremely risky play requiring AI demand to continue growing at a lightning pace, with any material weakness in that demand potentially triggering a cascade of consequences as debt service obligations consume cash flows that should support the core software business. Oracle’s 52-week range of $118.86 to $345.72 illustrates how dramatically the AI narrative has unraveled, with shares now trading closer to the bottom than the peak of this range as investors recognize that aggressive expansion funded through unsustainable leverage creates existential rather than growth risks. The combination of failed financing attempts, bonds trading like junk despite investment-grade ratings, credit default swaps at financial crisis levels, and quarterly capex of $12 billion requiring continuous debt market access creates a situation where Oracle faces genuine solvency concerns if AI infrastructure investments fail to generate projected returns or if lenders refuse to continue funding expansion on terms the company can afford.
Navan (NAVN)
Navan exemplifies the dangers of recent AI-branded IPOs where impressive revenue growth masks deteriorating profitability and mounting cash burn, with shares crashing nearly 17% following third-quarter results showing the business travel and expense management software provider lost $225 million in the quarter, more than five times the losses a year ago despite growing revenue 29% year-over-year to $195 million. The company’s announcement that CFO will be leaving effective January 9th with no permanent replacement named compounds concerns about financial oversight during a period when the business burns cash at accelerating rates, with Chief Accounting Officer Anne Giviskos serving as interim CFO while management searches for a permanent finance chief willing to tackle the company’s profitability challenges. This CFO departure following a disastrous earnings report typically signals either disagreements over financial strategy or recognition that the path to profitability remains far more difficult than management publicly acknowledges.
While Navan reported gross booking volume increasing 40% year-over-year to $2.6 billion with gross profit margin holding steady at 71%, these superficially impressive metrics cannot obscure the fundamental reality that the business model generates massive losses despite years of operations and substantial scale. The 69.92% gross margin demonstrates the company captures reasonable value when acquiring customers, yet this profitability at the gross level completely evaporates by the time operating expenses are considered, suggesting either bloated cost structures or customer acquisition economics that require unsustainable spending to maintain growth rates. Management’s guidance for fourth-quarter revenue of $161-163 million ahead of analyst forecasts and full-year revenue of approximately $686.5 million matching expectations provides no comfort regarding the path to profitability, particularly given free cash flow year-to-date remains negative at approximately $15 million despite management projecting positive non-GAAP income of $21-22 million for the full year.
Trading at $14.66 per share at the time of writing with a market capitalization of approximately $3.4 billion, Navan carries a valuation demanding faith that the company can somehow achieve profitability despite losses quintupling year-over-year even as revenue growth of 29% suggests the business has achieved meaningful scale. The stock’s 52-week range of $11.76 to $25.00 illustrates the brutal selloff since the late October IPO as investors recognized that AI branding cannot substitute for demonstrated ability to convert revenue growth into profits, with shares having fallen essentially continuously since going public. Analysts project free cash flow won’t reach breakeven for at least two more years, creating a scenario where Navan may need to raise additional capital at dilutive valuations to fund operations until achieving cash flow positivity, particularly concerning given the CFO departure suggests potential challenges in the finance organization that could complicate capital raising efforts. For investors seeking exposure to business travel technology, Navan represents a cautionary tale about IPOs launched on AI hype where impressive gross margins and booking volume growth mask unsustainable cash burn, departing financial leadership, and business models that may never achieve the profitability necessary to justify valuations assigned during the initial public offering.
