4 actions I would avoid at all costs
If you thought 2020 was a difficult year to explain, with a market on the rise despite a pandemic and a global recession, good luck trying to figure out 2021. It’s been a crazy business year so far, and we’re not yet than in January.
Some of the market’s gains are justified, but I’m not sure if a few of the market’s darlings will be able to maintain the good times by the end of the year. I see Flashing charge (NASDAQ: BLNK), GameStop (NYSE: GME), Tesla Motors, (NASDAQ: TSLA), and Airbnb (NASDAQ: ABNB) as high-profile actions to be avoided. They could continue to soar over the next few days, but it wouldn’t surprise me if all four trade lower – and in some cases significantly lower – in a year.
Blink Charging shares hit an all-time high on Tuesday. The electric vehicle charging station operator now has a market capitalization of $ 2.5 billion, or 560 times its $ 4.5 million – yes, million – in rolling revenue. The calculation does not make sense for any of the the hottest stocks of last year.
Some would argue that Blink Charging has a long track record with the electric vehicle boom, but why will Blink Charging be a leader in the future as it winds its way into the present? Tesla owners are covered by the Supercharger station network, and competition will intensify in major cities for third-party kiosks that may never be profitable given the dynamics of pricing and overheads.
I’ll throw in the towel on the short-term prognoses when it comes to GameStop. It’s clear that traders are playing it like a brand new video game right now. They’ll eventually trade it in for something brighter, but realizing that the event will happen is the surest appeal as the moment the bottom drops out of the monster rally.
GameStop could continue to trade higher in the days and weeks to come, but it won’t be a $ 10 billion business a year from now. Its operating income has fallen sharply for five consecutive years. Sales are just over half of what they were when they peaked eight years ago. Traders have been struggling with the game controller right now, and they will be having fun with the stock. The fundamentals don’t change. Gamers buy low-margin consoles and accessories from GameStop, but then turn to digital content with infrequent physical game purchases. The stock may continue to trade higher in a few days or even weeks. In the long run, real business matters.
GameStop’s business will be weaker a year from now, and there is no doubt that Telsa Motors will be stronger. I like everything about Tesla Motors, except the price of its share. Tesla’s meteoric rise currently makes it the fifth most valuable company in terms of market capitalization. It’s a sticker price that’s hard to justify.
Tesla is not going to give up its pole position in the rising electric vehicle market. It will continue to make its mark, and the revolution is real. The market cap of $ 837 billion is what worries me here. My next car should be a Tesla, but I can’t say the same for my next investment.
One of the hottest last year IPO actions was Airbnb. The hotel industry disruptor needs to be watched. It’s shaking up the accommodation space and arming owners of additional rooms or vacation properties with a new way to enjoy their vacation. However, when Airbnb hits the market at $ 68 and then continued, that should have given any rational investor a reason to pause.
The stock has now almost tripled and it’s hard to justify Airbnb as a $ 114 billion company today. Revenue has fallen 32% in the first three quarters of 2020, and while that’s understandable given the travel smother pandemic, it’s not as if Airbnb wasn’t already slowing down before the COVID crisis. -19. Revenue increased from 43% in 2018 to 32% in 2019.
Are you sure Airbnb will return to 2019 levels soon? The vaccination process has been slow to start and countries are imposing more travel restrictions instead of fewer in light of new, more contagious strains emerging. When the rubble clears, it may take a few years for leisure travel to return to normal, and we may never see business travel return, given the accelerated adoption of travel tools. digital communication over the past year. Airbnb is a large company with a big lead in a promising market, but like Tesla, it will take time to reach its high valuation.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.