Lofty market valuations will increase the risk of losses in weaker companies. As the S&P 500 (SPY) and Nasdaq (QQQ) close at daily new highs, it will lift penny stocks temporarily.
Readers who dig into the details of Plug Power (PLUG), will realize this is a stock to avoid. The company posted a GAAP EPS full-year loss of $2.30 a share. Although revenue rose by 27% Y/Y to $891 million, it does not make money. In its earnings release, the management team did not provide any meaningful financial information. For example, the press release offered a few high-level bullet points but left out basic income and balance sheet tables.
Markets picked out SoundHound AI (SOUN) strictly from “AI” in its name. The company lost 7 cents a share. Revenue grew by an astonishing 80.5% Y/Y. However, the $17.15 million revenue is tiny compared to the $1.59 billion market capitalization.
SoundHound forecasts revenue growing by only 30% in FY 2025. This is too low for a stock that trades at up to 30 times sales.
A year after regional banks plunged, New York Community Bancorp (NYCB) is the company to avoid. It still trades at a $2.56 billion market capitalization. This may change. Bears are short-sellers that have a 7.15% short float against the stock. After disclosing a massive $2.4 billion charge and replacing its CEO, NYCB stock fell by 25.89% last Friday.
Look out for selling momentum to continue in NYCB shares this morning.
