2 Falling Knives to Avoid
Here are two stocks I think are falling knives that you should avoid. 
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 (NASDAQ: COIN)
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 (NASDAQ: TSLA) 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

Published On
2023-05-27 11:29

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.

Analyst Ratings
Target Price$75.4
# of Analysts25
Last updated2022-12-17

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..

Nvidia: The Colossus Shaping the Future of Technology
Nvidia's meteoric rise from a gaming-focused company to a data-center colossus underscores its visionary prowess, though geopolitical dynamics with China loom as potential challenges.
By Alfonso | 3 weeks ago

2 Tech Stocks That Have Dipped Too Far
Here are two stocks that have dipped too far and are ripe for a rebound.
By Mike Sakuraba | 1 month ago

2 Defensive Stocks to Buy During the Market Downturn
Here are a couple of defensive stocks to load up on ahead of what could be a bumpy close to August. 
By Mike Sakuraba | 1 month ago

2 Stocks Stuck After Reporting Earnings
The Trade Desk and Tesla reported strong earnings with The Trade Desk set for robust revenue growth in 2024 and Tesla anticipated to bounce back soon, highlighting positive future prospects despite recent stock declines.
By Mike Sakuraba | 1 month ago

Why Coinbase Stock Could Double in 2024
If Coinbase can execute all of these bullish events, the stock could easily double from here in 2024.
By Mike Sakuraba | 1 month ago

AI's Game Changer: NVIDIA's GH200 is Here!
Unleashing The Future: A Look at NVIDIA's Groundbreaking Advancements.
By Alfonso | 1 month ago

Palantir and Disney: 2 Earnings Calls You Can't Miss
So which earnings am I watching next week?
By Mike Sakuraba | 1 month ago

Apple Earnings Fallout: The Fall of the King
Apple saw its third consecutive quarter of declining sales.
By Mike Sakuraba | 1 month ago