2 Falling Knives to Avoid
Here are two stocks I think are falling knives that you should avoid. 
avatar
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2023-05-27 11:29

2 Stocks That Are Falling Knives to Avoid
When we talk about falling knives, we mean stocks that look tempting to catch on the way down but should probably be left alone. Too often investors will catch a falling knife, only to lose a further 30% from the price at which they bought it. It’s unfortunate but it is a part of human nature. Remember, it happens to everyone who invests at least once so don’t feel too bad about it. Given the volatility we’ve seen so far this year, here are two stocks I think are falling knives that you should avoid.
2 Falling Knives to Avoid
Coinbase ($236.1|4.53%)
In my opinion, there are just too many red flags for both Coinbase and the crypto industry right now. I am and will always be bullish on crypto for the long term. I think Bitcoin is a very real solution to global financial problems. But, the current state of the industry is a nightmare, especially here in the United States. Not only are regulators trying to bully crypto companies out of the country, but they are trying to sign in bills that would nearly eradicate cryptos altogether.

Coinbase itself has been targeted by lawsuits and a Wells notice from the SEC, and CEO Brian Armstrong has hinted that the company could base itself internationally in the future. Possible locations include the United Kingdom and the Bahamas. Does that sound like a bull case for crypto and Coinbase for the next few years? I understand it has its supporters like Ark Invest, but for me, the risk far outweighs the reward when it comes to investing in Coinbase. This is a stock that has gained 70% this year in spite of all of these negative headlines. Until the crypto industry in the United States is safe, I am steering clear of Coinbase’s stock.

Lucid Group (NASDAQ: LCID)
How this company still has a market cap of nearly $15 billion is astounding to me. Sure, the revenue growth was decent, but when it comes from such a low base it really doesn’t mean much. This is a company that said it would be challenging Tesla ($145.48|2.42%) within a few years. But sure enough, Lucid is yet another SPAC stock that continues to see its share price fall back down to Earth.

This is nothing against Lucid’s cars. I think they’re pretty good-looking vehicles but I do have an issue with their overall business plan. I just don’t think there is a global market for luxury EVs yet, especially if we are heading into a recession. Lucid might not even reach its target of producing 10,000 vehicles this year, which would be yet another setback for the stock. There is still plenty of cult appeal for this stock and the name and potential for electric vehicles remains a carrot that dangles in front of investors. But there are far better EV companies to invest in than Lucid, and I think this stock will continue to go much lower for the rest of the year.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Rate this article

positive
negative
Published On
2023-05-27 11:29

avatar
About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

$236.1
$10.244.53%
Perf. YTD34.40%
52W high-15.93%
52W low408.51%
PE Ratio633.83
MKT Cap46.16B
Other:  LCID


buy-coffee
You've read 1 article in the last year
..thank you for supporting us and for visiting our site. Unlike many other sites, The Dog of Wall Street is available for everyone to read. Our focus is to provide great content for free. Do you like what we are doing? Buy us a cup coffee. It is the fuel that keeps us going..

Is Tesla Back? Has TSLA Stock Finally Bottomed?
Tesla Stock Analysis: Robo Taxis to the Rescue?
By Mike Sakuraba | 2 weeks ago

2 Stocks to Buy During an April Pullback
Here are 2 stocks I’d buy during an April pullback.
By Mike Sakuraba | 2 weeks ago

TSM Stock: Is This The True Winner of the AI Race?
TSM’s stock has gained nearly 40% this year which is about half of NVIDIA has returned.
By Mike Sakuraba | 2 weeks ago

Best Proxy for Bitcoin: Coinbase or IBIT
In this article, we’ll compare the iShares Bitcoin Trust to Coinbase to see which is the best proxy for Bitcoin on the stock market.
By Mike Sakuraba | 3 weeks ago

2 Under the Radar AI Stocks to Buy
If you’re tired of reading about NVIDIA, consider these two AI stocks to add while the chip market cools off.
By Mike Sakuraba | 3 weeks ago

3 Bold Predictions for the Second Quarter
So here’s what I’m expecting for the second quarter and I’ll throw in a couple of bold predictions as well!
By Mike Sakuraba | 3 weeks ago

2 Stocks Cathie Wood Keeps Buying That You Should Too
In the world of retail investing, Cathie Wood and her Ark Invest fund are extremely polarizing.
By Mike Sakuraba | 4 weeks ago

2 Under the Radar Stocks to Buy Before Others
One of the keys to investing has always been to identify weaknesses in stocks before others. Buy it when everyone hates it and when everyone loves it you’ll reap the rewards. Sounds easy enough right?
By Mike Sakuraba | 4 weeks ago