Wall Street took a big step back in the ninth trading week of 2023. I thought my "three stocks to avoid" -- Cricut, Stitch Fix, and Baozun -- were going to lose to the market in the past week. They declined 5%, 6%, and 18%, respectively. The final result was an average slide of 9.7% for the week.
The S&P 500 moved 4.5% lower for the week. I was correct. I have been right 48 of the past 73 weeks, or 66% of the time.
Let's turn our attention to the week ahead. I see BuzzFeed (BZFD 2.65%), Coinbase (COIN 4.13%), and Lennar (LEN 3.00%) as stocks you might want to consider steering clear of this week. Let's go over my near-term concerns with all three investments.
NASDAQ: BZFD
Key Data Points
1. BuzzFeed
There was a crazy week in January when shares of BuzzFeed more than quadrupled. The online content publisher told its staff that BuzzFeed was turning to ChatGPT parent OpenAI to enhance its signature quizzes and personalize other features. It also expanded a partnership with Meta Platforms.
The gains weren't sustainable, and it given back nearly all of those gains. The shares have plummeted by two-thirds since being singled out in this column. The company reports fourth-quarter results shortly after Monday's close.
Image source: Getty Images.
The fourth quarter itself shouldn't be very surprising. BuzzFeed delivered an update on Dec. 7, just a couple of weeks before the end of the fiscal period. It expects $129 million to $134 million in revenue, down from the $145.7 million it delivered a year earlier.
But things could be worse than epxected, as the online advertising market has only deteriorated since the first week of December. Guidance can also be problematic, and the company can't play that ChatGPT card anymore.
NASDAQ: COIN
Key Data Points
2. Coinbase
A financial platform faltered last week, and for a change it wasn't a crypto exchange, but rather Silicon Valley Bank. As the country's leading platform for trading digital currencies, Coinbase can't afford to laugh. After an initial bounce for both Coinbase stock and cryptocurrencies, gravity is starting to have its say.
Coinbase stock is now down 39% since last month's high, and things could get worse. Quality banks should recover from last week's swoon, but it's hard to see crypto exchanges, even a historically conservative player like Coinbase, regaining its 2021 form. A sound balance sheet is no match for cryptocurrency traders facing a liquidity crunch.
NYSE: LEN
Key Data Points
3. Lennar
Another potentially problematic report this week could be Lennar. The leading homebuilder is facing a rapidly cooling housing market, with rates rising and demand waning. This is bad news for companies, including Lennar, that builds homes and operates a wide range of services to seal the deal.
Lennar has rattled off 12 consecutive fiscal years of revenue growth, but that streak is probably about to meet its cyclical end. Analysts see revenue sliding 18% in fiscal 2023 on a 42% collapse in earnings per share. Lennar is likely to take the first step down with its fiscal first-quarter results on Tuesday afternoon.
Analysts see a modest dip on both ends of the income statement in this week's report, accelerating as the fiscal year plays out. Margins are already crumbling like shoddy drywall, and the only way out of a wave of order cancellations is market-adjusted price cuts. Bulls will argue that Lennar is cheap even on a forward-earnings basis. There is also a need for more real estate in the underbuilt U.S. market. Both bullish arguments are true, but that doesn't matter now that the multiyear rally in real estate is long in the tooth.
The stock market is always on the move. If you're looking for safe stocks, you aren't likely to find them in Coinbase, BuzzFeed, and Lennar this week.
