2 Stocks with Red Flags to Avoid in 2023
These two stocks stood out as companies with red flags
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.
2023-01-14 11:30

2 Growth Stocks with Red Flags to Avoid
When picking stocks, identifying a company’s red flags can be just as important as identifying the green ones. It can be as simple as the stock’s valuation, industry trends, or macroeconomic factors. If you can look down the road and see where these issues might arise, then it can save you a lot of future pain when holding that stock. This is partly why we put so much stock into analyst forecasts and projections.
2 Stocks with Red Flags to Avoid in 2023
Growth stocks are attractive to investors because of their opportunity for outsized growth, just as their name implies. But these companies can also come with a lot more risk since they are typically at a more vulnerable stage in their business lifecycle. It is a chance we all take when investing in these companies. As we head into 2023, I am trying to identify stocks that have the potential to provide great returns on your investment. These two stocks stood out as companies with red flags that are making me rethink their potential for growth this year.

Netflix (NASDAQ: NFLX)
Despite the saying about investing in things that you use every day, Netflix is an exception to this rule. Streaming services in general are under a bit of pressure right now. With the emergence of Walt Disney’s (NYSE: DIS) Disney+ service, Netflix saw one of its biggest-ever losses in subscribers last year. On top of that, the company has been desperately pulling at different levers to jump-start its business. Last year, the company announced a new lower-priced tier that would feature advertising during shows. In December, there was a report that this new tier was not doing as well as Netflix had hoped. On top of that, Netflix continued to raise its monthly prices and is now double the price of Disney+ for the premium tier. Finally, Netflix has announced a plan to eliminate account sharing among users. While this last factor can be a good thing, it might just be the straw that breaks the camel’s back in terms of pushing users away from its platform. With a looming recession, people are going to be looking to cut costs. I think it's more likely people cut Netflix than Disney+ or YouTube.

Lucid (NASDAQ: LCID)
One ‘good’ thing that Lucid recently did is raise $1.5 billion through a private stock sale to various investors including its number one stakeholder, the Saudi Arabia Public Investment Fund. So now that Lucid has enough cash to last them the year, can the company get anyone to buy its cars? Earlier this week, Tesla ($175.79|-2.25%) lowered the prices of its vehicles in the United States and Europe. Overall, Tesla has lowered the price tag by 20% in some markets, which is a problem for competitors like Lucid. If Tesla can’t sell cars in this environment, what chance does Lucid have? With a looming recession, not many people are looking to buy a $90,000 car. With much cheaper alternatives and costs of materials still rising, I just don’t see how Lucid can recover at all in 2023. Steer clear of this EV stock!


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
2023-01-14 11:30

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.

Analyst Ratings
Target Price$301.83
# of Analysts36
Last updated2022-12-19

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 Rivian (RIVN) Stock a Buy Again?
The company continues to bleed money and is losing more than $40,000 per vehicle.
By Mike Sakuraba | 2 weeks ago

2 Stocks to Buy on a Pullback
Here are two stocks I’ll buy if we pull back in March.
By Mike Sakuraba | 2 weeks ago

Bitcoin is Hot: 2 Stocks to Buy Now
Here are 2 lesser-known crypto stocks that I think will benefit from Bitcoin’s bull run.
By Mike Sakuraba | 3 weeks ago

2 Stocks to Buy for the March Bull Run
Here are 2 I have my eyes on for March.
By Mike Sakuraba | 3 weeks ago

2 Stocks to Buy on the Earnings Dip
Here are two stocks that sold off that I have my eye on!
By Mike Sakuraba | 3 weeks ago

2 Stocks to Ride the NVIDIA Hype Train
Now that NVIDIA (NASDAQ: NVDA) saved the market again, is it finally time to buy?
By Mike Sakuraba | 1 month ago

2 Stocks I'm Never Buying Again
Never is such a strong word but when it comes to investing, it is easy to never want to buy a stock again.
By Mike Sakuraba | 1 month ago

Is it Too Late to Buy SMCI Stock?
Is it too late to get into SMCI after this parabolic run?
By Mike Sakuraba | 1 month ago