With the Fed indicating to remain hawkish to fight inflation, the stock market ended last week with a loss, continuing its losing streak for three straight weeks. This, along with the…
economic contraction for two consecutive quarters of the year, increases the odds of a recession.
According to Peter Boockvar, Chief Investment Officer at Bleakley Financial Group, the latest data on housing and manufacturing show why the United States will not be able to avoid a recession. The National Association of Home Builders/Wells Fargo Housing Market Index fell into negative territory in August.
A better-than-expected August jobs report is unlikely to benefit risky markets, as it could further encourage the Fed to tighten its policy.
Given this backdrop, fundamentally weak stocks PayPal Holdings Inc. (PYPL), Warner Bros. Discovery Inc. (WBD), and Farfetch Limited (FTCH) could tumble further. These stocks were recently downgraded to Strong Sell or Sell in our proprietary POWR Ratings system. So, we think they are best avoided now.
PayPal Holdings Inc. (PYPL)
PYPL operates a technology platform that facilitates digital payments for merchants and consumers worldwide. It offers payment services under the brand names PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy.
During the second quarter ended June 30, 2022, PYPL’s revenue increased 9.1% year-over-year to $6.81 billion. Its operating income declined 32.2% from the year-ago value to $764 million. The company reported a net loss of $341 million, compared to a net income of $1.18 billion in the prior-year quarter. Its loss per share amounted to $0.29.
The stock has declined 68.1% over the past year and 51.7% year-to-date.
PYPL’s POWR Ratings are consistent with this bleak outlook. The stock’s overall rating was recently downgraded to D, which translates to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Warner Bros. Discovery Inc. (WBD)
WBD, a media company, distributes content in approximately 50 languages worldwide through various distribution platforms. It also produces, develops, and distributes feature films, television, gaming, and other content in physical and digital formats via basic networks, direct-to-consumer or theatrical distribution, TV content, and game licensing.
WBD’s revenue increased 220.9% year-over-year to $9.83 billion for the second quarter ended June 30, 2022. However…
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