The valuations of many stocks have risen sharply this year. However, investors should be careful not to assume that this year’s trends will continue into 2024. Growth stocks, in particular, are trading at high prices, and a correction may come in the near future. Here are three stocks that could stall next year. riot platform (riot 6.15%), C3.ai (A.I. -2.31%) and tesla (TSLA -0.77%).
1. Riot Platform
There is no mystery behind Riot Blockchain’s impressive performance this year. The valuation of virtual currencies is rapidly increasing. BitcoinThe price of has jumped more than 150%. But Riot hasn’t just been on a roll, his stock is up 417%.
Riot is a Bitcoin mining and digital infrastructure company. As the price of Bitcoin increases, so too will your returns. The company’s revenue totaled $51.9 million in the third quarter ended Sept. 30, an increase of 12% from the same period last year, according to its latest earnings report. However, Riot still posted a net loss of $45.3 million for the quarter (compared to a loss of $32.4 million a year ago).
Although the company is making further investments in expanding production capacity, the risk for investors is that the stock will remain heavily dependent on the value of Bitcoin. Bitcoin’s value has proven volatile over the years. Unless Bitcoin performs well again in 2024, Riot Platforms is a stock that could run out of steam in the near future. Unless you have a high risk tolerance, it’s best to avoid stocks.
2.C3.ai
Artificial intelligence (AI) company C3.ai has benefited from the AI boom this year. Although it does not have a chatbot, it does provide AI solutions to companies. The only problem is that the growth isn’t all that impressive. Investors see this, Nvidia While companies such as C3.ai have seen significant growth this year thanks to AI, that hasn’t been the case for C3.ai.
Revenue for the past three quarters has been in the range of $72 million to $73 million, with no significant quarter-over-quarter revenue growth. It has remained roughly flat. The troubling scenario is when C3.ai starts updating this year’s numbers. In the last quarter (ending Oct. 31), the company’s revenue totaled $73.2 million, an increase of 17% year-over-year. However, if the year-on-year growth rate, which usually gets more attention than the quarter-on-quarter growth rate, drops to just 1 percentage point, the stock market could lose its gear.
Year-to-date, C3.ai’s stock is up more than 180%, but has fallen in recent months. This trend is likely to continue until 2024. C3.ai is a risky AI stock to own, and it may have already peaked.
3. Tesla
Electric vehicle (EV) maker Tesla is a popular company for long-term growth investors. The EV market is a very hot market, and Tesla is a leading company in that regard. Over the years, the company’s financial situation has improved and now it is highly profitable and has one of the highest stock prices in the world. S&P500.
Tesla stock has doubled this year. But it also faces some challenges heading into next year. For example, the company’s recently launched Cybertruck won’t be profitable until at least 2025, CEO Elon Musk said.
Meanwhile, the company’s profit margins are already under pressure from price cuts. Tesla’s gross profit margin in the last quarter (ending September 30) was just 17.9%, compared with 25.1% in the same period last year. Musk also warned investors in October that “if macroeconomic conditions get rough, even the best ships will still be in trouble.”
Tesla is the only stock of the three on this list that is a good long-term investment. But investors should also be prepared for EV stocks to slow down next year or even fall in value due to weaker underlying earnings numbers or economic headwinds.
David Jagielski has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Nvidia, and Tesla. The Motley Fool recommends his C3.ai. The Motley Fool has a disclosure policy.