Banking & Finance

This Is the Stock to Dump for the Rest of 2022

The market sell-off has taken stock indexes from all-time highs at the start of the year to levels that are 20% lower for the S&P 500 and over 30% for the Nasdaq. Many Wall Street analysts believe these will fall further in the second half.

Tech stocks have been most brutally battered. Amazon is down 34%. Netflix has fallen over 60%. Non-tech stocks that raced toward all-time highs have also had tremendous sell-offs. Ford’s stock price has dropped 45% this year.

Some stocks are considered safe havens. Their businesses are often boring, but stable. Many have strong dividend yields. Verizon probably should be on the top of this list.

Several public corporations are in deep financial trouble, and their share prices could go much lower. An analyst at Morgan Stanley recently wrote that the stock price of cruise company Carnaval could drop to zero. The same comment has been made about troubled retailer Bed Bath & Beyond. Some companies which went public recently are in distress just as severely. Electric vehicle startup Lordstown Motors traded as high as $9.68 in the last year. Recently, it dropped to $1.60. Its cash balance challenge could push the price toward zero as well.

The worst stock to own for the balance of the year is Meta, parent company of Facebook. So far, the social media corporation’s stock is down 52% this year.

There are several reasons Meta, an immensely popular and profitable investment until the middle of last year, faces more hurdles. Government regulators want to limit the content that can appear on Facebook. Some of this content has been part of promoting hate crimes, and discrimination. Meta management says it can and will regulate these. Some members of Congress and politicians in other countries believe otherwise.

An author recently wrote in the Guardian, “Facebook’s sheer size and market dominance remain a significant barrier to change, and a growing chorus of lawmakers and others are calling for a simple solution: break it up.” Such a breakup could cause uncertainty about stock value, and if Facebook is broken up how will the pieces be valued in the public markets?

Facebook’s primary business headwind is the recession. Facebook relies almost completely on advertising for its revenue. Advertising rates usually fall sharply when the economy turns down

Dump Meta shares. Facebook is in trouble.

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