Choosing the right stocks can help you grow your wealth, but holding onto the wrong ones can be a costly mistake. Some stocks don’t just underperform—they can drain your portfolio and erase your hard-earned gains faster than you realize.
The reality is, many investors overlook the warning signs, and by the time you hear about the risks, it’s often too late. Some of these problematic stocks might even be popular names, regularly making headlines for all the wrong reasons.
We’ve put together a list of stocks that we believe you should consider selling or avoiding right now. If any of these are in your portfolio, it might be time to rethink your position before they start dragging you down.
Super Micro Computer (NASDAQ: SMCI) Uncertainty Looms Despite Potential Recovery
Super Micro Computer has experienced both highs and lows in 2024. The company started the year with impressive triple-digit revenue growth driven by demand from AI customers and achieved milestones like joining the S&P 500 and Nasdaq 100. However, the stock has since dropped 70% from its peak in March, and recent developments suggest continued uncertainty.
The delayed filing of financial reports, compounded by the resignation of its auditor and a short report from Hindenburg Research, has shaken investor confidence. Although Supermicro has taken steps to regain Nasdaq compliance, including hiring a new auditor and pledging to file reports by February 25, the lack of finalized financials remains a significant red flag.
Adding to the pressure, Supermicro will be removed from the Nasdaq 100 on December 23 as part of the index’s rebalancing. This could lead to additional short-term selling pressure from funds that track the index.
While the company’s forward P/E ratio of 11 suggests potential value, it’s crucial to have clarity on its financial health before investing. Until audited reports are released and the company fully addresses these concerns, the risks outweigh the potential reward.
Supermicro may become a recovery story in 2025, but for now, it’s better suited for your watchlist than your portfolio.
Lucid Motors (NASDAQ: LCID) A Risky Bet in a Competitive EV Market
Lucid Motors continues to draw comparisons to Tesla, but the gap between the two companies remains vast. While Lucid has made strides in producing and delivering vehicles—reporting a 90% year-over-year improvement in Q3 deliveries—it still lags far behind Tesla’s scale. To put it in perspective, Tesla delivered 462,890 vehicles in the same period, compared to Lucid’s 2,781.
This stark disparity underscores Lucid’s uphill battle to compete in an increasingly crowded EV market. While Tesla faced little competition during its early days, Lucid must contend with both established automakers and new entrants vying for market share. Building its business requires massive capital investments, and Lucid is still deep in the red. The company reported a Q3 2024 loss of $0.41 per share, widening from a $0.28 loss a year ago.
Management has emphasized its liquidity of $5.16 billion, but this cash reserve is not infinite. The company faces significant pressure to scale production and move toward profitability before those funds run dry. With stiff competition and a challenging road ahead, Lucid remains a speculative bet rather than a stable investment.
Unless you’re prepared to take on high levels of risk in the hopes of a long-term turnaround, Lucid Motors is a stock to avoid for now. Watch the story unfold from the sidelines rather than betting on a recovery that’s far from guaranteed.
Wolfspeed (NYSE: WOLF) High Risk with Too Many Uncertainties
Wolfspeed has had a rough year, with its stock plummeting more than 80% in 2024. While the company’s focus on silicon carbide technology aligns with growing demand in electric vehicles and renewable energy, the road to profitability looks long and uncertain.
The challenges are significant. Wolfspeed is hemorrhaging cash, with a net loss of $282.2 million in its most recent quarter and total liabilities of $7.2 billion—nearly matching its total assets. The company’s costly transition to 200mm silicon carbide wafer production has further strained its balance sheet, while EV demand is softening, leading to declining revenue.
Management upheaval, including the departure of its CEO in November, adds another layer of risk, along with the possibility of losing $750 million in CHIPS Act funding if certain milestones are not met. Cost-cutting measures, like a 20% workforce reduction and halting factory construction, are in place but won’t bear fruit until at least 2026.
While Wolfspeed is a leader in silicon carbide technology, its precarious financial position and industry headwinds make the stock a highly speculative bet. Until the company shows tangible progress in stabilizing its business and achieving profitability, it’s best to avoid this high-risk stock.