While no one likes to see their portfolio plunge during a rough period in the market, one upside of the recent extreme stock market volatility is that there are plenty of top stocks trading at discounts. But, just because a stock is trading at a discount doesn't mean you should jump to buy it, either. In this segment of Backstage Pass, recorded on Dec. 3, Fool contributors Toby Bordelon, Rachel Warren, and Jose Najarro share three stocks that are trading down right now -- and potentially with good reason.
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Toby Bordelon: What's one company that you're still skeptical about even though the price might have dropped? Even looking at a big price drop since you're thinking, "I'm not quite sure yet. I don't know if I'm ready to go in quite yet or I'm not sure that it isn't justified." Let's start with you, Rachel.
Rachel Warren: This is a weird one, I feel like as a healthcare writer here but to name one company where I'm not really sure, even though the price is down a little bit, it would be Moderna (MRNA 0.98%). This company's value just ballooned based on its COVID-19 vaccine success. I believe this was the first product it's ever distributed. It's been around for a long time but this was the first time the product actually made it to market.
Shares of the company fell, I believe about 12% the other day. Essentially, Moderna was trying to invalidate a couple of patents that another company had on the technology it uses to deliver its COVID vaccine and the court affirmed the previous ruling thing saying no Moderna, you can't invalidate those patents. [laughs]
The stock plunged a bit. You could say it's trading a little bit of a sale, I think its current valuation is somewhere in the ballpark of $124 billion market cap. For me, this is a company I think it'd go either way. It may be able to ride off the profits and tremendous success of its COVID vaccine to bring other lucrative products to market. Obviously, like we were talking about earlier, the mRNA technology.
There is a lot of incredible things and different types of medicines and vaccines that can be used as the base of, and that could be really changing the landscape of the medical field. But right now, I wonder if that valuation matches up with its long-term prospects given the fact that this was its first product after all this time in business. But it's one I'm watching.
Bordelon: I agree. Definitely, one to watch. Jose, where are your thoughts?
Jose Najarro: Mine is, one that I wouldn't watch anytime soon and that would be Rivian (RIVN -0.66%). This is a stock that it's down about 60% I believe or over 40% from its all-time highs. I can definitely see why certain investors might be excited about the growth, the partnership or the kind of orders from Amazon. But it's right now sitting still at about I believe $100 billion market cap. Let me take a quick look, $90 billion market cap.
I'm pretty sure this is bigger than a lot of other automobile companies right now. Obviously one of the point is that, hey, this is more than just an automobile company, just how Tesla is more than just an automobile company. But even after seeing this 40% drop, I'm still skeptical about it. Not one that [laughs] I would look at anytime soon. But maybe it's just me being blinded and not seeing the future growth that this company can grow in the future.
Bordelon: I don't know if you're being blinded. It's about $90 billion market cap right now which I believe is more than Ford or GM. I don't know if Rivian has actually delivered more than a couple hundred vehicles in its entire existence as of yet. I think it's OK to be skeptical about a company that might be valued on the order of half a billion per car or something to that effect. Potential sure, but like you, shall we say a little bit skeptical about the current price.
Najarro: This is coming from the guy that's investing in some NFTs as well. [laughs]
Bordelon: Yeah. [laughs] Jose you're right. Exactly. If you want to spend money on NFTs, I don't know if I want to have touch Rivian. Maybe people should listen to you Jose.
My company that I have wanted to throw out here is WeWork (WORK). WeWork stock is down. WeWork came out [laughs] earlier this week and said we're restating a couple of years of financial results [for the sponsor of its special purpose acquisition company.] Mind you, they haven't even been public for a couple of years. Basically they're saying the stuff we put in our registration statement, our prospectus might not be right.
Warren: Oh, great. [laughs]
Bordelon: The stock dropped hard, it sound like 40% since late October. We've talked about companies who might be looking at buying, there might be bargains right now, please, please, please, if you're watching the show do not think that WeWork is a bargain right now.
Restating results is no joke guys. I would not look at this until we have more clarity on what's going on and what this is going to be. This is not a case of the stock dropping along with the rest of the market. There is a real reason it went down because they basically told you we can't be confident in the financial numbers we put out [for its SPAC]. Careful with that one. Man, that's a been a fun company to follow.
Warren: Fun one to talk about. [laughs]
Bordelon: Not from necessarily I want to invest in a standpoint, but man, it's has been a fun story.
Editor's Note: This article was updated on 12/20 to reflect that the financials being restated are that of the Special Purpose Acquisition Company that brought WeWork public, not WeWork's own financials as is stated in the video.