The stock market is set for its worst first half in decades this year. The S&P 500 is down more than 20% since the start of the year. Further interest rate hikes by the Federal Reserve to depress prices could sharply increase borrowing costs, triggering an economic slump.
Lisa Shalett of Morgan Stanley Wealth Management said the chances of the US economy slipping into a recession this year have doubled in recent weeks to more than 50%.
For investors, this indicates that the S&P 500 could fall another 10% from current levels. She also said, “We don’t believe the cyclical bear market can end until earnings are reduced, making second and third quarter earnings reports critical.”
In this context, it might make sense to avoid stocks with high short-term interest rates. Short interest is the number of shares that have been sold short but have not yet been covered. The short percentage of free float for a security in a long-term uptrend is typically set at 25%. However, a high valuation could be a red flag.
Arcimoto, Inc. (UVF), Beyond Meat, Inc. (BYND) and Nikola Corporation (NKLA) were significantly shorted by investors, pushing their respective ask interest above 35%, implying bearish sentiment. Additionally, these stocks are rated Strong Sell in our POWR Rankings system.
Arcimoto, Inc. (UVF)
Based in Eugene, Oregon, FUV designs, develops, manufactures, sells and leases three-wheel electric vehicles in the United States. Its flagship product is the Fun Utility Vehicle (FUV), which is used for everyday consumer travel.
For the first quarter ending March 31, 2022, FUV’s revenue decreased 53.4% year-over-year to $0.65 million. Its operating loss increased 69% from its value a year ago to $12.93 million, while its net loss increased 173% from the year-ago quarter to 12, $95 million.
Analysts expect FUV’s EPS to remain negative in the second quarter ending June 2022. The company’s shares have fallen 78.8% over the past year. FUV has a short interest of 42%.
FUV’s POWR ratings are consistent with this grim outlook. 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.
FUV is rated F for quality, growth and stability. In category F Automobile and vehicle manufacturers industry, it is ranked No. 66 out of 66 stocks.
To view additional POWR ratings for value, sentiment and momentum for FUV, Click here.
Beyond Meat, Inc. (BYND)
BYND manufactures, markets and sells plant-based meat products in the United States and around the world. The company sells a range of plant-based meat products on the beef, pork and poultry platforms.
For the first quarter ending April 2, 2022, BYND’s operating loss increased 296.14% year-over-year to $97.63 million. The company’s net loss rose 271.7% from the year-ago quarter to $99.78 million, while its loss per share rose 267.4% from its stock value. year to $1.58.
Net cash used in operating activities increased 438.9% from the prior period to $165.21 million for the quarter ending April 2, 2022.
The consensus estimate for EPS is expected to remain negative in the second quarter ending June 2022. The stock is down 83% over the past year. BYND has a short stake of 40.2%.
BYND’s weak fundamentals are reflected in its POWR ratings. The stock has an overall F rating, which equates to a strong sell. The stock also has an F rating for growth, value and stability. In category B Food manufacturers industry, it is ranked last out of 88 stocks.
In addition to the POWR Ratings I just highlighted, you can see the BYND rating for Momentum, Sentiment, and Quality here.
Nikola Company (NKLA)
NKLA operates as a technology innovator and integrator that works to develop energy and transportation solutions. It has two operational business units, Truck and Energy. The Truck business unit develops and markets hydrogen and battery electric semi-trailers for the trucking sector. The Energy business unit develops and builds a network of hydrogen refueling stations.
For the first quarter ending March 31, 2022, NKLA’s operating loss increased 25.5% year-over-year to $151.31 million. Its net loss rose 27.2% from its value a year ago at $152.94 million, while its loss per share rose 19.4% from the year-ago quarter at $0.37.
Net cash used in operating activities increased 121.6% from the prior period to $131.32 million for the quarter ending April 2, 2022.
The consensus estimate for EPS is expected to remain negative in the second quarter ending June 2022. Shares of the company have fallen 77% over the past year. NKLA has a short stake of 37%.
NKLA’s weak outlook is also apparent in its POWR ratings. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system. It has an F rating for stability and quality and a D rating for feeling. NKLA is ranked #60 in the Automobile and Vehicle Manufacturers industry.
Click here to see additional POWR ratings for NKLA (Quality, Value and Momentum).
FUV shares were trading at $3.11 per share on Wednesday afternoon, down $0.22 (-6.61%). Year-to-date, FUV is down -60.03%, compared to a -19.39% rise in the benchmark S&P 500 over the same period.
About the Author: Spandan Khandelwal
Spandan’s is a financial journalist and investment analyst specializing in the stock market. Through its ability to interpret financial data, it aims to help investors assess a company’s fundamentals before investing. After…