Tech Stocks Are Due For Another Sell-Off -- 3 To Avoid

Employers added 3,15,000 new jobs in August, marginally surpassing Refinitiv economists’ projection of 3,00,000. Most traders are now apprehending a third consecutive 75 bps rate hike.

The tech-heavy NASDAQ composite has lost 26.2% year-to-date, while iShares U.S. Technology ETF (IYW) slumped 29.2% year-to-date. The Fed’s persistent hawkish stance, supported by the hot job market, might cause an extended sell-off in the tech industry.

Given the backdrop, fundamentally weak tech stocks Snowflake Inc. (SNOW), Riot Blockchain, Inc. (RIOT), and American Virtual Cloud Technologies, Inc. (AVCT) might be best avoided now.

Snowflake Inc. (SNOW)

SNOW provides a cloud-based data platform in the United States and internationally. The company’s platform offers Data Cloud, which organizations in various industries use.

On August 2, 2022, BTIG, LLC analyst Gray Powell downgraded SNOW from Buy to Neutral.

SNOW’s operating loss came in at $207.73 million for the second quarter ended July 31, 2022, up 3.8% year-over-year. Moreover, its net loss came in at $222.81 million, up 17.5% year-over-year. Also, its loss per share came in at $0.70, up 9.4% year-over-year.

SNOW’s EPS is expected to decrease 58.3% year-over-year to $0.05 for the quarter ending January 2023. Over the past year, the stock has lost 45.2% to close the last trading session at $169.80.

SNOW’s poor fundamentals are reflected in its POWR Ratings. The stock’s overall D rating indicates a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

SNOW has a D grade for Value, Momentum, Stability, and Quality. In the D-rated Technology – Services industry, it is ranked #73 out of 82 stocks. Click here for the additional POWR Ratings for Growth and Sentiment for SNOW.

Riot Blockchain, Inc. (RIOT)

RIOT and its subsidiaries focus on bitcoin mining operations in North America. Its segments are Electrical products and Engineering; Data Centre Hosting; and Bitcoin Mining. The company operates approximately 30,907 miners.

RIOT’s net loss came in at $366.33 million for the period ended June 30, 2022, compared to a net income of $19.34 million in the year-ago period, while its adjusted loss per share came in at $0.50, compared to an EPS of $0.03 in the prior-year period. Its adjusted EBITDA came in at a negative $65.17 million, compared to $2.39 million in the previous period.

Analysts expect RIOT’s EPS to decrease 2,975% year-over-year to negative $2.46 in 2022. It missed EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 81.4% to close the last trading session at $6.40.

RIOT has an overall F rating, equating to a Strong Sell in our POWR Ratings system. It has an F for Stability and Quality and a D for Value and Sentiment. It is ranked #80 in the same industry. Beyond what is stated above, we’ve also rated RIOT for Momentum and Growth. Get all RIOT ratings here.

American Virtual Cloud Technologies, Inc. (AVCT)

AVCT is a pure-play cloud communications and collaboration company providing cloud-based enterprise services worldwide. The company’s Kandy cloud communications platform is a cloud-based, real-time communications platform.

AVCT’s total revenue came in at $3.72 million for the second quarter that ended June 30, 2022, down 24.8% year-over-year. The company’s loss from continuing operations came in at $24.01 million, up 105.6% year-over-year. Its loss per share came in at $0.08, up 89.7% year-over-year.

AVCT’s revenue is expected to decrease 11.5% year-over-year to $103.59 million in 2022. It missed consensus EPS estimates in two of the four trailing quarters. Over the past year, the stock has lost 95.1% to close the last trading session at $0.22.

AVCT’s POWR Ratings reflect its poor prospects. The stock has an overall D rating, equating to Sell in our rating system. It also has an F grade for Quality and a D for Growth, Stability, and Sentiment. It is ranked #73 in the same industry. We have also rated AVCT for Value and Momentum. Get all AVCT ratings here.

SNOW shares rose $0.24 (+0.14%) in after-hours trading Wednesday. Year-to-date, SNOW has declined -47.52%, versus a -15.63% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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