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2 High Volume Stock Investors Should Sell Now

The Federal Reserve raised its benchmark interest rate by 0.75% yesterday, the central bank’s second consecutive move of this magnitude. However, benchmarks jumped in yesterday’s session on investor expectations of a milder recession.

Despite the market rally following the Fed’s decision, Morgan Stanley urges investors to refrain from investing in shares. Mike Wilson, U.S. equity strategist and the firm’s chief investment officer, said Wall Street’s euphoria about interest rate hikes possibly slowing sooner than expected was unwarranted and worrisome.

Shopify Inc. (STORE) and Snap Inc. (INSTANTANEOUS) have seen high trading volume lately, with most investors dumping these stocks. Due to their low growth attributes and current market uncertainties, we believe these stocks are best avoided now.

Shopify Inc. (STORE)

SHOP is a e-commerce company that operates in Canada, the United States, Europe, the Middle East, Africa, Asia-Pacific and Latin America. It sells bespoke themes and applications, domain name registration and merchant solutions, including payment acceptance, shipping and fulfillment, and working capital security. SHOP traded at an average trading volume of 43.04 million over the past three months.

Shopify announced on Tuesday that it would cut about 1,000 employees, or 10% of its global workforce. CEO Tobi Lutke said in a memo to colleagues that he had underestimated the duration of the pandemic-driven e-commerce boom and that Shopify will cut several positions in light of a general drop in online spending.

SHOP’s total revenue increased 15.7% year-over-year to $1.29 billion in the second quarter ended June 30, 2022. However, its operating loss narrowed. amounted to $190.21 million, compared to operating profit of $139.44 million in the prior year period. . The company reported a net loss of $1.20 billion, compared to net income of $879.09 million in the second quarter of 2021. Its loss per share was $0.95 over that period.

The company’s EPS is expected to decline 100% and 94.4% in the current quarter and next quarter, respectively. The stock is down 77.3% over the past three months and 5.6% over the past month.

Stores POWR Rankings fit into these gloomy prospects. The stock has an overall rating of F, which translates to a strong sell in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

SHOP has been rated F for stability and D for quality and value. In category F Internet Services industry, it is ranked last of the 30 stocks.

Click here to see additional POWR ratings for Growth, Sentiment and Momentum for SHOP.


SNAP’s core product, Snapchat, is a camera app that allows consumers to visually interact with friends and family through short movies and photographs called Snaps. Snapchat is its main app for mobile devices, with five tabs. The stock has traded at an average volume of 53.86 million over the past three months.

For the second quarter ended June 30, 2022, SNAP’s revenue increased 13.1% year-over-year to $1.11 billion. However, the company operating loss grew 108% year over year to $400.94 million. Its net loss jumped 178% from the year-ago quarter to $422.07 million, while its non-GAAP loss per share was $0.02. Moreover, its adjusted EBITDA decreased by 94% compared to the previous year’s value at $7.19 million.

SNAP’s EPS is expected to decline 111.8% in the current quarter. The stock is down 87.1% over the past year and 64.8% over the past three months.

SNAP’s weak fundamentals are reflected in its POWR ratings. The stock has an overall D rating, which is equivalent to a sell in our proprietary rating system. The stock has a D rating for stability, feeling, and quality. In dimension F the Internet industry, it is ranked #59 out of 65 stocks.

In addition to the POWR Ratings I just highlighted, you can see SNAP Ratings for Momentum, Growth, and Value here.

Shares of SHOP fell $1.17 (-3.32%) in premarket trading on Thursday. Year-to-date, SHOP is down -75.21%, compared to a -14.89% rise in the benchmark S&P 500 over the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. After…

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