These securities are sinking and for good reasons. Investors should stay away.
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Things are getting difficult for technology stocks. The rotation of investor capital out of the mega-cap tech names that led the market rally in the year’s first half is accelerating. Now, disappointing earnings reports from several high-profile technology concerns are exacerbating the selloff, highlighting tech stocks to sell.
Microsoft (NASDAQ:MSFT) just released its second-quarter print and the company’s stock immediately fell 7%. Microsoft’s stock plunged despite the fact that the company’s results beat Wall Street forecasts for both sales and profits. Microsoft missed estimates for revenue in its cloud computing unit. As a result, the stock went down, dragging the Nasdaq Composite index lower with it.
The situation illustrates the shifting sentiment towards tech stocks and also shows that investors are not forgiving when it comes to the current earnings season. Here are three tech stocks to sell before you regret it.
Tesla (TSLA)
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The only thing Tesla’s (NASDAQ:TSLA) second-quarter financial results made clear is that things are getting worse at the electric vehicle maker. The company had a disastrous Q2 print, announcing EPS of 52 cents versus 62 cents that was expected among analysts. Revenue of $25.50 billion was slightly ahead of Wall Street forecasts of $24.77 billion. However, total sales were up only 2% from a year earlier.
Worse, Tesla reported that its revenue generated from electric vehicle sales declined 7% year-over-year to $19.90 billion. Tesla’s profit margin fell to 14.4% from 18.7% in the second quarter of 2023. The bottom line is that Tesla continues to struggle with declining sales and rising competition, especially in China. As a result, the company has to continue dropping prices and offering discounts on its vehicles, hurting profit margins.
TSLA stock fell 18% in the last 12 months.
AT&T (T)
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AT&T (NYSE:T) delivered a humdrum Q2 print that largely fell short of Wall Street estimates due to a continued erosion of its fiber-optic customers. The telecommunications giant reported EPS of 57 cents, which was inline with Wall Street forecasts. However, the profit was down 10% from a year earlier. Revenue totaled $29.80 billion, down 0.4% from a year earlier and slightly below estimates that called for sales of $29.98 billion.
AT&T reported its second consecutive quarter of better-than-expected landline phone subscribers, but it continues to see a slump in its more lucrative fiber-optic internet business. The company said it added 239,000 broadband customers in Q2, which was below the 248,600 that analysts had anticipated. The company maintained its full-year guidance, calling for earnings of $2.15 to $2.25 per share and broadband revenue growth of 7%. T stock is trading 26% lower than where it was at five years ago.
BlackBerry (BB)
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When it comes to tech stocks to sell, former smartphone maker turned meme stock BlackBerry (NYSE:BB) takes the cake. The company, which now focuses on cybersecurity and the Internet of Things (IoT), reported that its net loss grew by nearly 300% as its sales evaporate. BlackBerry reported a first-quarter net loss of $42 million, which was 282% greater than a net loss of $11 million a year earlier. The latest results translated into a loss of 7 cents per share versus a loss of 2 cents the previous year.
Revenue at BlackBerry totaled $144 million for what was its fiscal first quarter, down 61% from $373 million a year ago. The company is scrambling to cut costs as its financial situation rapidly deteriorates. Earlier this year, BlackBerry eliminated 200 jobs and closed six of its 36 global offices. It remains to be seen if the cost controls will have a positive impact. BlackBerry’s share price is down 53% over the last 12 months and now trades as a penny stock.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.