3 Tech Stocks Bracing for a Deeper Dive

Stocks to sell

Tech stocks in the United States sustained a jaw-breaking rally in 2023, with the Nasdaq beating all other indices, accruing a more than 43% return. While stocks largely did not begin 2024 with a great start, the major indices have risen in the past few weeks. Both major indices, S&P 500 and Nasdaq, have almost risen 7% YTD. While equities appear to be in a rally, that does not mean there aren’t any tech stocks that have suffered selling pressure. The stocks below have seen their share prices fall since the start of the year and are at risk for a deeper dive.

Okta (OKTA)

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Okta (NASDAQ:OKTA) is a cybersecurity firm that develops identity and access management (IAM) solutions for cloud-based applications and platforms. Put slightly differently, Okta enables its customers to securely manage the identities of their employees, customers, and partners across various security assets and endpoints. The rise of remote work supplied Okta with ample growth throughout the pandemic. This resulted in Okta carving out a strong position for itself in the fast-growing IAM market. Unfortunately, macroeconomic uncertainty has not made everything picture-perfect.

Revenue growth has been on the decline in 2023 due to businesses becoming more thoughtful about their tech spending. Unfortunately, Okta is still largely unprofitable. In their Q4 2023 earnings print, total revenue for the year increased 43% Y/Y, but the company expects revenue for 2024 to only grow by 23%. This suggests Okta is still facing a difficult market for selling its products. Shares have fallen more than 8% since the start of 2024, and Okta is also trading at a relatively high multiple of 43.8x forward earnings, which could put shares at risk of a further dive.

Apple (AAPL)

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Despite its billions in cash and its world-renowned products, Apple (NASDAQ:AAPL) is one of the tech stocks to sell these days. The iPhone maker’s share price has fallen more than 5% already, and unless Apple is able to spur growth, the stock could face an even deeper dive. The company’s fourth-quarter report for the fiscal year 2023 saw revenue decline by 1% Y/Y. This underscores that the mobile handset market is still at capacity. Another reason investors should be wary of AAPL stock is the uncertainty of the Chinese market, which accounted for about 18.9% of Apple’s revenue at the end of its fiscal year 2023. Huawei’s launch of the Mate 60 Pro led many Chinese consumers to favor it over the new iPhone amidst geopolitical tensions.

There has recently been a lot of buzz around Apple’s VR headset. The headset boasts a $3500 price tag and offers users a unique virtual reality experience. However, even this new product has received mixed reviews from customers, with many returning the headset due to issues with headaches, comfort, and eyestrain.

All that to say, Apple has a long way to go to diversify from mobile handsets, and it’s currently uncertain how the company will successfully do so.

Rivian (RIVN)

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Rivian’s (NASDAQ:RIVN) stock has fallen more than 57% on a year-to-date basis despite receiving a “Strong Buy” rating from a number of Wall Street analysts. In 2023, Rivian was able to narrow its massive net loss to $5.4 billion in 2023 from $6.8 billion in 2022. Unfortunately, gross margins fell in Q4, still highlighting concerns about the company’s future profitability.

In Rivian’s Q4 earnings print, the company also announced staff cuts, which would amount to a reduction of 10% of its current workforce. Moreover, the slump in the overall EV market does not spell good news for Rivian either. Tesla, one of the market’s largest players, is expecting growth to slow in 2024, and smaller, more niche EV makers should anticipate a reduction in growth as well.

On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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