While the stock market has seen huge periods of volatility over the last 50 years, taking a buy-and-hold approach to funds tracking the S&P 500 and other leading indexes has proven to be one of the best ways to generate wealth. Those who invested in a basket of individual stocks and exchange-traded funds fared even better.
On the other hand, that doesn't mean that adopting long-term investment strategies will necessarily pan out for all stock buyers. Some stock picks are going to lose money. Read on for a look at three popular stocks that look like risky plays for long-term investors right now.
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1. Lucid
Lucid (LCID +0.71%) is a specialist in the electric vehicle (EV) market and is making a name for itself as a provider of high-quality luxury vehicles in the category. Across its core Air sedan and Gravity SUV lines, the company's vehicles have generally received high marks from industry experts, media outlets, and vehicle owners.
The company also received a notable endorsement from Uber Technologies last year, with the ride-hailing leader signing a partnership to secure at least 20,000 vehicles from the EV manufacturer to support its robotaxi initiatives. On the other hand, the quality of Lucid's business appears to diverge substantially from the quality of its vehicles.
NASDAQ: LCID
Key Data Points
As a specialized and relatively young player in the EV market, it's not surprising that Lucid has been posting big losses. The company's business model ostensibly takes pages out of Tesla's playbook and aims to forge a path to profitability by harnessing economies-of-scale benefits that come with a rapidly expanding manufacturing footprint. On the other hand, there are big reasons to doubt whether Lucid will be able to execute along those lines.
Luicd has continued to rack up massive losses, and it's also continued to dilute retail investors by selling large blocks of new shares to Saudi Arabia's Public Investment Fund (PIF). These dynamics look poised to continue for the foreseeable future.
2. Plug Power
Plug Power (PLUG +1.58%) has positioned itself as a pioneer in hydrogen-fuel-cell and electrolyzer technologies. In last year's third quarter, the company touted sales of $65 million for its GenEco electrolyzer business -- up 46% on a sequential quarterly basis and 13% year over year. On the other hand, total revenue came in at $177 million, representing a modest improvement over the roughly $174 million in sales it recorded in the prior-year period.
Like Lucid, Plug Power relies on issuing new stock and convertible bonds to raise funds. Along those lines, there's a good chance that investors who buy stock today will face substantial dilution.
Meanwhile, Plug Power posted a net loss of approximately $361 million in the quarter, with the outsized loss driven by write-downs, inventory factors, and restructuring expenses. These individual costs won't be recurring, but it also wouldn't be surprising to see the company announce more write-downs with subsequent quarterly reports.
NASDAQ: PLUG
Key Data Points
While its operating loss narrowed 49% year over year to roughly $90 million thanks to cost-efficiency initiatives and other catalysts, the extent to which the business will be able to improve operating margins along these lines is limited. Despite posting sales growth in the third quarter, the company's backlog actually declined 11% on a sequential quarterly basis as previously slated electrolyzer deals were recorded as revenue. With sales potentially set to begin declining again, as evidenced by the substantial drawdown for its order backlog, Plug Power is a very risky play right now.
3. Boeing
Of the three stocks outlined as potential portfolio wreckers in this article, Boeing (BA +1.54%) probably stands the best chance of delivering wins for investors. The company has faced big challenges in recent years, with high-profile crashes for its airliners and big write-downs making headlines. On the other hand, there are some signs that the company's turnaround efforts could bear fruit. Boeing has sold off some non-core businesses, made acquisitions that could help support sustained growth, and shown encouraging order backlog momentum.
NYSE: BA
Key Data Points
Boeing posted sales of $23.3 billion in Q3 -- good for growth of roughly 28% year over year. On the other hand, the business still posted an operating loss of $5.05 billion in the period. The performance represented an improvement over the operating loss of $6 billion posted in the prior-year quarter, but that result is far from encouraging, given that the business also posted a big sales jump in the period.
With the company closing out Q3 with consolidated debt of roughly $53.4 billion, Boeing's financial dynamics continue to look fraught. With $6 billion in net losses over last year's first three quarters, the business's turnaround still has a long way to go. Investing in the stock at this stage may not offer enough upside potential given the headwinds at hand.
