2 Growth Stocks That Might be in Trouble
Here are two stocks whose long-term outlook could be in doubt.
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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.
2023-02-18 11:55

Are These Two Growth Stocks in Trouble?
It has been an interesting earnings season so far, to say the least. Big tech companies missed badly while blue-chip companies continue to perform well. One major difference from recent quarters is that high-growth companies are starting to break out again. Part of this is likely because these stocks have been so beaten down over the past couple of years. While investors who have been holding these stocks are celebrating at the moment, there could also be some red flags that are rearing their ugly heads. Here are two stocks whose long-term outlook could be in doubt.2 Growth Stocks That Might be in Trouble
Palantir Technologies (NYSE: PLTR)
I wrote about Palantir recently as an AI play with the recent fervour around the likes of ChatGPT. This remains true and I still think Palantir might be a strong company in the future. Shares of the stock jumped more than 20% after the company reported its first-ever GAAP profitable quarter. American government revenue continued to be the strength for Palantir. On the commercial side, revenue grew 12% on a year-over-year basis but it also fell 15% on a sequential quarterly basis. On top of that, GAAP operating margin came in lower on a year-over-year basis as the company continues to struggle with high operating costs. The stock has also been bogged down by an overuse of stock-based compensation or SBC which has plagued the company for years now. There is no denying that reaching profitability is a huge milestone for Palantir. The key now is for the company to maintain this and cut down its operating costs in the future. I don’t recommend buying a stock after a recent 20% surge, but Palantir will certainly be an interesting company to follow for the rest of 2023.

Shopify (NYSE: SHOP)
What was once a wonderful growth story for investors has certainly lost its lustre over the past couple of years. Canadian eCommerce giant Shopify saw its stock fall by about 15% despite topping Wall Street estimates for revenue and earnings. Shopify provided disappointing guidance for this next quarter which sent shares tumbling. A closer look showed that merchant growth has seemingly plateaued and Wall Street analysts were quick to downgrade the stock following the call. This was to be expected as Shopify did raise contract prices for merchants. So what do we do with Shopify? The growth story seems to be fading and what we are left with is sort of a mess. There needs to be more organization and the long-term growth that once looked like a home run for the company is fading fast. Analysts expect earnings to dip back into negative territory next quarter which could send the stock further spiralling. Guidance took into account that macroeconomic pressures continue to weigh on the company and industry, something we have seen from Amazon (NASDAQ: AMAZN) as well. We need to see how Shopify performs over the next few quarters, but for now I am staying away even if the stock goes on further sale.


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.

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Jon AMZN KAVANAGH
Jon AMZN KAVANAGH
1 year ago
Ticker symbol for Amazon is wrong in your article. You might be wrong on its growth potential too. I'm not sure about shopify.
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Guest
Guest
1 year ago
I guess Palantir will never get it’s due. Profitable or not it will keep gets put down by so called stocks expert.
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Published On
2023-02-18 11:55

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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.


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