The right stocks can make you rich and change your life. The wrong ones, though, can do far more damage than simply underperforming. They can erode your wealth, eating away at your hard-earned profits. These are the stocks that act as pure portfolio poison, and while not all investors like to confront this reality, it’s essential to know when to walk away.
Here are three companies that investors should reconsider holding. If you own any of these “toxic stocks,” it may be time to sell.
Moderna (MRNA): Challenges Persist Amid Revenue Decline
Moderna (MRNA) shareholders have faced a tough year, with the stock plummeting by 79% since last May. While the company has an impressive vaccine pipeline, its near-term outlook is troubling. Revenue guidance for 2024 has been narrowed to $3–$3.1 billion, and projections for 2025 are even more alarming, with a range of $1.5–$2.5 billion—a potential 50% drop. Moderna’s respiratory syncytial virus (RSV) vaccine, mRESVIA, is struggling to gain traction against competitors like Pfizer and GSK, who had a significant head start. Adding to these challenges, the company burned through $2.7 billion in the past year despite reducing operating expenses. While Moderna has $9.5 billion in cash to fund its operations, the volatility of vaccine sales and fierce competition make this a risky stock, particularly for conservative investors.
Hims & Hers Health (HIMS): Growth at Risk Amid Regulatory Uncertainty
Hims & Hers Health (HIMS) had a stellar 2024, with its stock soaring 172%. But recent developments signal potential trouble, with shares already down 15% in the past month. The company has benefited from offering compounded versions of high-demand GLP-1 drugs like Ozempic and Wegovy amid shortages, but these shortages could end soon, removing a key growth driver. Additionally, compounded drugs are not FDA-approved, adding regulatory uncertainty to this revenue stream. With telehealth becoming an increasingly competitive space, Hims & Hers faces growing pressure to maintain margins and attract customers. While the company’s growth has been impressive, its heavy reliance on short-term opportunities raises questions about sustainability.
Quantum Computing (QUBT): Speculative and Overvalued
Quantum Computing (QUBT) has experienced a meteoric rise—up 2,400% in just three months—driven by hype surrounding AI and quantum computing. However, the fundamentals reveal significant concerns. Since its founding in 2001, the company has pivoted multiple times, moving from selling inkjet cartridges to beverages and now claiming to be a player in quantum computing. This pattern raises doubts about its strategic focus and credibility. Financially, the company is deeply underwhelming, with just $386,000 in trailing 12-month revenue and a staggering price-to-sales ratio of 5,400. To fund operations, Quantum Computing has already raised $14.6 million through secondary offerings in 2024 and may issue more shares, diluting existing shareholders. For investors seeking exposure to quantum computing, more established players with stronger fundamentals are a safer bet.