Tech Stocks That Have Lost Their Edge: 3 Names to Nix Now

Stocks to sell

The uncertainty in the stock markets makes it imperative to offload these tech stocks to sell. Though tech stocks ruled the roost last year, it’s important to understand that not all technology companies are created equal.  Moreover, with heightened interest rates, the financial resilience of tech firms, especially those lacking deep pockets, comes under the scanner.

Given these market conditions, some tech stocks are likely to falter. This trimming becomes doubly important for tech stocks that are underperforming and need to prepare to navigate the headwinds of higher borrowing costs and economic uncertainty. For investors, hedging against these uncertainties can help avoid portfolio losses, thus improving long-term gains.

Moreover, selling a tech stock at a market position above its intrinsic value allows for a better re-entry at a later date after a correction occurs. Having said that, here are three tech stocks to sell, offering little upside ahead despite their market positions.

EBay (EBAY)

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Electronic commerce giant eBay (NASDAQ:EBAY) impressed with its Q1 earnings beat, but its relatively strong results were overshadowed by its soft second-quarter guidance. EBAY stock had been on an encouraging run before the press release, gaining more than 32% in the past six months. However, with inflation squeezing the economy, the slowdown in its stock may become more prolonged.

Its Q1 results surpassed analyst expectations across both lines, posting an earnings-per-share (EPS) of $1.25 and revenue of $2.6 billion. The top-line expansion during the quarter is mainly due to to a 30% jump in promoted listings and display advertisements.

However, Wall Street was more concerned about its Q2 guidance, which was considerably behind market forecasts. eBay’s management expects the firm to deliver $2.49 billion to $2.54 billion in sales and an EPS ranging from $1.10 to $1.15. Market analysts, though, were expecting $2.56 billion in sales and $1.14 EPS, sparking a sell-off. The cautious outlook is linked to the slowdown in eCommerce growth, particularly in consumer discretionary items, a situation unlikely to change in the near term.

Coinbase (COIN)

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Coinbase (NASDAQ:COIN) is a crypto exchange platform that has grown at a healthy pace amid the broader acceptance of digital currencies. Despite the platform’s popularity, it has had a spotty track record in generating profits, with its revenues tied to the erratic crypto market conditions. Moreover, it consistently faces regulatory roadblocks, having to align its operations with varying legal standards on a global scale.

Over the past five years, its operating performance points to the significant volatility in its bottom-line results, mirroring the crypto market’s volatility. The firm’s net income jumped from a $30.4 million loss in 2019 to a peak profit of $3.62 billion million in 2021 during the crypto boom. Subsequently, its net profit plummeted during the crypto winter of 2022, posting a $2.62 billion loss. Last year, its losses dropped to $1.35 billion, reflecting a strong recovery.

Furthermore, it’s up against some major challenges on the regulatory front. It recently lost against the Supreme Court in a case involving deceptive practices in Dogecoin sweepstakes. Coinbase is also challenging the SEC regarding the rules on crypto transactions, fearing a widespread impact on the broader market.

Peloton (PTON)

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Peloton (NASDAQ:PTON)was once a celebrated pandemic stock but now grapples with challenging financial outcomes and lackluster growth prospects. With people returning to gyms and embracing outdoor activities, its in-home exercise equipment and subscription plans have fallen out of favor. Given its poor post-pandemic recovery, it’s arguably one of the worst tech stocks to buy.

Compounding its woes, Peloton recently announced a massive $275 million offering in convertible senior notes while securing a hefty $1 billion term loan and a $100 million credit line. This financial measure will manage the immediate cash flow crises, as it looks to buy back $800 million in existing debt.

This move follows the departure of its CEO, Barry McCarthy, and a worrying 15% workforce reduction, which points to deeper troubles. Hence, with these developments in play, it’s essentially a no-brainer to offload PTON stock at this time.

On the date of publication, Muslim Farooque 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

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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