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5 Tech Stocks to Avoid in 2022

With a recession looming, some stocks will weather the coming months much better than others. Here are five tech stocks to avoid in 2022.
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Thanks to rising interest rates and high inflation, tech stocks have experienced one of the worst starts to a year ever. The tech-heavy Nasdaq is down nearly 30% to start 2022. Even traditionally invincible FAANG stocks are feeling the heat. For example, Apple is down 25%, Microsoft is down 25% and Meta Platforms is down 40%. With a recession looming, some stocks will weather the coming months much better than others. With that said, here are five tech stocks to avoid in 2022.

Top Tech Stocks to Avoid

No. 5 Affirm (Nasdaq: AFRM)

Affirm Holdings Inc is one of the most popular Buy Now Pay Later (BNPL) companies. Thanks to record low-interest rates and stimulus checks, these companies soared in popularity in 2020-21. Now, Affirm’s stock is down nearly 85% from its all-time high. But, it might get even worse in the next few months. This is because Affirm could get set up for failure over the coming months.

Right now, inflation in the United States is hovering around 8%. This stat alone is already pretty bad. When you look at individual categories, the situation gets much worse. Rent is increasing between 20-40% in some parts of the country. The price of gas is also up to over $4.50 on average throughout the country. It’s no secret that the American consumer is getting squeezed.

With more money going to rent, gas, and food people will have less spending money. BUT, they still need to buy goods to an extent. This makes Buy Now, Pay Later services like Affirm’s very attractive for consumers. With Affirm, consumers can buy the things that they want for a fraction of the cost. Suddenly, people can get the new pair of shoes that they want for only $20…even though the shoes still cost $100.

There’s a good chance that people start heavily leaning on Affirm’s service in order to afford goods. But, that doesn’t mean that these consumers will be able to pay off their loans in two to three months.

Keep reading for more on tech stocks to avoid.

A Mini 2008?

During the 2008 Financial Crisis, home loans became very easy to get. Lenders essentially handed out home loans to anyone who wanted one. During this time, plenty of people got approved for loans that were well outsideb of their budget range. This ultimately led to a mass nationwide mortgage default, which almost crippled the financial system. Although it probably won’t be as severe, there’s a chance that something similar could happen with Affirm.

Essentially, when people get easy access to credit they usually abuse it. It’s just human nature. People take out loans that they have no means to repay. If Affirm isn’t careful, their easy credit policy could actually put them out of business.

No. 4 Teladoc (NYSE: TDOC)

Teladoc is a virtual healthcare company that connects patients with doctors via smartphone. But, this competitive advantage is fairly easily copied. To differentiate itself, Teladoc acquired a Livongo Health for $18.5 billion in 2020. Livongo health was a fast-growing chronic-care management business. At the time, this probably seemed like a good acquisition.

Unfortunately, Teladoc hasn’t been able to replicate Livongo’s success. It’s been so bad that Teladoc had to record a crushing $6.6 billion impairment charge related to its Livongo acquisition. So basically, last quarter Teladoc reported a net loss of $6.67 billion on revenue of just $565.35 million. This alone is reason enough to consider Teladoc one of the main tech stocks to avoid in 2022. But, there’s one more factor to consider… the competition.

CVS Health is the 4th-biggest company in the United States. It also operates MinuteClinics out of most locations. Following the COVID-19 pandemic, most of these clinics now offer virtual visits. This basically erodes most of Teladoc’s competitive advantage. Now, Teladoc will be directly competing with CVS.

No. 3 Peloton (Nasdaq: PTON)

Many stocks got overhyped during the pandemic. Peloton, as a stay-at-home fitness company, was leading the pack of pandemic stocks. Now it’s leading a different pack: the top tech stocks to avoid. Peloton made one major flaw that spelled its demise. It mistook pandemic demand for real demand.

In 2021, Peloton’s sales were soaring. But, this was mainly just because people had no gym access. Peloton’s management, instead of prepping investors for a sales dropoff, started scaling quickly to compensate. It spent tons of money to scale its business, only for sales to plummet in 2022. This is part of the reason that its stock has tanked.

Granted, Peloton is taking steps to correct its mistakes. So far, it has hired a new CEO and laid off 2,800 employees. But, it could take years for Peloton to really turn the boat around.

No. 2 Paysafe (NYSE: PSFE)

Paysafe is a payment solutions provider that has been around since 1996. But, there’s no telling how much longer it will be around. At the least, it’s one of the main tech stocks to avoid for the coming months.

Paysafe reported a 2021 annual revenue of $1.49 billion and a net loss of $110 million. In the first quarter of 2022, it reported a net loss of $1.17 billion. This type of loss might be acceptable for a 5-year-old high-growth tech company. But not for a 26-year-old payment processing company. There are also two elephants in the room to talk about: Block Inc and Paypal.

Block Inc offers roughly the same service as Paysafe but posted a 2021 annual revenue of $17.66 billion. Same thing for Paypal, which posted a revenue of $25.37 billion. On top of that, the most valuable tech startup in the U.S. is Stripe. Stripe is another payment processing company that’s valued at around $36 billion.

All three of these companies are much more widely accepted than Paysafe. With no major discernible competitive advantage, it’s just hard to see Paysafe catching up anytime soon.

Tech Stocks to Avoid No. 1 Opendoor (Nasdaq: OPEN)

Of all the stocks on this list, Opendoor actually has the most potential. Opendoor is a company that lets people buy and sell homes virtually. It is revolutionizing the home buying process by making it easier than ever. The company is also growing incredibly quickly.

Opendoor delivered Q1 2022 revenue of $5.2 billion. This was up 590% year-over-year. It also posted a gross profit of $535 million compared to just $97 million in 2021. This all sounds pretty good. So why is Opendoor one of the five tech stocks to avoid in 2022?

Well, Opendoor also has an inventory balance of 13,360 homes. These are homes that Opendoor has bought but not sold yet. It pegs the value of these homes at $4.7 billion. As a digital broker, Opendoor is trying to buy and sell as many homes as it can. It then collects a percentage from each deal.

What Happens to Opendoor When these Home Prices Come Crashing Down?

Home prices jumped 20% nationally from Mar. 2021 to Mar. 2022. This is the largest jump on record, according to CoreLogic. The national housing market has been on fire in recent years. However, interest rates are rapidly increasing. This could put homes out of reach for many buyers and rapidly cool the market. If this happens, there’s a chance that Opendoor could suffer a massive decline in the value of its inventory balance. This might not hurt Opendoor’s long-term prospects, but it will definitely cause investors to re-evaluate the company. Most likely, this will result in a massive paper loss of Opendoor’s assets.

I hope you’ve found this article valuable in learning about the best tech stocks to avoid in 2022! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post 5 Tech Stocks to Avoid in 2022 appeared first on Investment U.

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Economics

Expert on Bath & Body Works: ‘an easy double the next three years’

Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says…

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Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says the Senior Vice President and Portfolio Manager at Westwood Group.

BBWI separated from Victoria’s Secret

The retail chain separated from Victoria’s Secret in 2021, which, as per Lauren Hill, clears the way for a 100% increase in the stock price in the coming years. On CNBC’s “Closing Bell: Overtime”, she said:

[Bath & Body Works] has really strong pricing power. They have 85% of their supply chain in the United States and with the Victoria’s Secret brand now gone, I think it’s a wonderful buy; an easy double the next three years.

Last month, the Columbus-headquartered company reported results for its fiscal first quarter that topped Wall Street expectations.

Bath & Body Works is a reopening play

The stock currently trades at a PE multiple of 6.64. Hill is convinced Bath & Body works is a reopening name and will perform so much better as the world continues to pull out of the pandemic. She noted:

Customers have missed buying their scented products in store and as their social occasion calendars fill up, they are getting back out there and buying more gifts, including Bath & Body Works products.

Hill also dubbed BBWI a great pick amidst the ongoing inflationary pressures because of its reasonably priced products. Shares are down more than 50% versus the start of 2022.

The post Expert on Bath & Body Works: ‘an easy double the next three years’ appeared first on Invezz.

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Economics

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A…

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Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A majority of C-suite executives are considering leaving their jobs, according to a Deloitte survey of 2,100 employees and C-level executives from the United States, Canada, the UK, and Australia.

Almost 70 percent of executives admitted that they are seriously thinking of quitting their jobs for a better opportunity that supports their well-being, according to the survey report published on June 22. Over three-quarters of executives said that the COVID-19 pandemic had negatively affected their well-being.

Roughly one in three employees and C-suite executives admitted to constantly struggling with poor mental health and fatigue. While 41 percent of executives “always” or “often” felt stressed, 40 percent were overwhelmed, 36 percent were exhausted, 30 percent felt lonely, and 26 percent were depressed.

“Most employees (83 percent) and executives (74 percent) say they’re facing obstacles when it comes to achieving their well-being goals—and these are largely tied to their job,” the report says. “In fact, the top two hurdles that people cited were a heavy workload or stressful job (30 percent), and not having enough time because of long work hours (27 percent).”

While 70 percent of C-suite execs admitted to considering quitting, this number was at only 57 percent among other employees. The report speculated that a reason for such a wide gap might be the fact that top-level executives are often in a “stronger financial position,” due to which they can afford to seek new career opportunities.

Interestingly, while only 56 percent of employees think their company executives care about their well-being, a much higher 91 percent of C-suite administrators were of the opinion that their employees believe their leaders took care of them. The report called this a “notable gap.”

Resignation Rates

The Deloitte report comes amid a debate about resignation rates in the U.S. workforce. Over 4.4 million Americans quit their jobs in April, with job openings hitting 11.9 million, according to the U.S. Department of Labor. In the period from January 2021 to February 2022, almost 57 million Americans left their jobs.

Though some are terming it the “Great Resignation,” giving it a negative connotation, the implication is not entirely true since most of those who quit jobs did so for other opportunities. In the same 14 months, almost 89 million people were hired. There are almost two jobs open for every unemployed person in the United States, according to MarketWatch.

In an Economic Letter from the Federal Reserve Bank of San Francisco published in April, economics professor Bart Hobijn points out that high waves of resignations were common during rapid economic recoveries in the postwar period prior to 2000.

“The quits waves in manufacturing in 1948, 1951, 1953, 1966, 1969, and 1973 are of the same order of magnitude as the current wave,” he wrote. “All of these waves coincide with periods when payroll employment grew very fast, both in the manufacturing sector and the total nonfarm sector.”

Tyler Durden Sat, 06/25/2022 - 20:30

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Spread & Containment

Optimism Slowly Returns To The Tourism Sector

Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn’t much of an improvement, as travel…

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Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn't much of an improvement, as travel remained subdued in the face of the persistent threat posed by Covid-19.

According to the United Nations World Tourism Organization (UNWTO), export revenues from tourism (including passenger transport receipts) remained more than $1 trillion below pre-pandemic levels in 2021, marking the second trillion-dollar loss for the tourism industry in as many years.

As Statista's Felix Richter details below, while the brief rebound in the summer months of 2020 had fueled hopes of a quick recovery for the tourism sector, those hopes were dashed with each subsequent wave of the pandemic.

And despite a record-breaking global vaccine rollout, travel experts struggled to stay optimistic in 2021, as governments kept many restrictions in place in their effort to curb the spread of new, potentially more dangerous variants of the coronavirus.

Halfway through 2022, optimism has returned to the industry, however, as travel demand is ticking up in many regions.

You will find more infographics at Statista

According to UNWTO's latest Tourism Barometer, industry experts are now considerably more confident than they were at the beginning of the year, with 48 percent of expert panel participants expecting a full recovery of the tourism sector in 2023, up from just 32 percent in January. 44 percent of surveyed industry insiders still think it'll take until 2024 or longer for tourism to return to pre-pandemic levels, another notable improvement from 64 percent in January.

Tyler Durden Sat, 06/25/2022 - 21:00

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