3 expensive stocks I would sell before the next stock market crash

The stock market has hit new highs in recent weeks and months, although the coronavirus persists in some places, the economy has not fully recovered and stimulus payments are still supporting things. All of this creates a risk that as things return to normal, the market as a whole could undergo a correction. Some of the money put into it could be cashed out and put back into bonds as interest rates rise, or used for other purposes when spending picks up and people choose to hold fewer stocks. .

If I had Modern (NASDAQ: mRNA), fuboTV (NYSE: FUBO), or Pinterest (NYSE: PIN), I plan to sell them now. Each company’s stock price has more than doubled over the past year, topping the S&P 500 and his gains of 35% during that time. But with inflated valuations and the possibility of an impending crash, they become riskier as the days go by.

Image source: Getty Images.

1. Modern

Moderna has climbed 250% in 12 months, and for good reason: its COVID-19 vaccine obtained emergency use authorization from the United States Food and Drug Administration (FDA) last year. The company expects to generate more than $ 18 billion in revenue from the vaccine in 2021, and its bottom line will ultimately be in the dark – in 2020, its losses totaled $ 747 million, or triple what she lost in 2017.

Things are certainly improving for Moderna, especially with its rival Pfizer is seeking FDA approval for a third dose of its vaccine to help fight the delta variant. If Pfizer is successful, Moderna is likely to follow suit, which could generate even more revenue for the company. But there is no certainty that this will happen. And other vaccines may soon hit the market, including one of Novavax, which plans to seek FDA clearance in the third trimester.

As countries have more options for vaccines, this will inevitably reduce Moderna’s revenue and potential market share. And beyond that, there are questions about what the future holds for Moderna after COVID-19. While its mRNA technology has proven to be effective, that does not guarantee that other vaccines in its pipeline will be successful. Its currently most advanced cytomegalovirus vaccine is entering phase 3 trials. With maximum annual revenue potential of between $ 2 billion and $ 5 billion, however, the company will not be able to rely solely on him to replace the revenue related to COVID-19.

Moderna’s future is a question mark for me, and while its 11 futures price-to-earnings ratio looks cheap, that could change dramatically after COVID. Even eventually, the stock is trading at over 6x earnings – Pfizer is only at 3. While Moderna is doing well at the moment, its stock is expensive and may see a correction soon.

2.fuboTV

Streaming and entertainment company fuboTV is unprofitable, and profitability does not appear to be in its sights. But that hasn’t stopped investors from hitting the bandwagon, pushing stocks up more than 160% in 12 months. Its subscriber base as of March 31 exceeded 590,000 people, an increase of 105% year-over-year. And the company could continue to attract more subscribers thanks to plans to launch a bookmaker before the end of the year.

However, as the company is growing rapidly, I am concerned that its approach may be too much aggressive in seeking income. In its most recent quarterly results, for the period ending March 31, revenues of $ 120 million were nowhere near enough to cover its $ 185 million in operating expenses. Of particular concern is that fuboTV incurred subscriber-related expenses of $ 113 million, more than the $ 107 million it generated from subscription revenue.

Without good margins to support the growth of the business, the problem for investors is that fuboTV’s finances might not strengthen as it expands, which could lead to an inevitable need to raise funds – diluting existing shareholders. fuboTV is currently trading at a multiple of 6 times its revenue, and although it is cheaper than NetflixIt’s a multiple of more than 9, the streaming giant is at least profitable. In the event of a crash, investors seek safety, and without a strong bottom line fuboTV shares could fall quickly.

3. Pinterest

Pinterest’s stock has benefited from people staying home during the pandemic and using its discovery engine to explore hobbies and interests. At the end of March, the company had 478 million monthly active users (MAU), a 30% increase year over year. This exceeds last year’s results, in which MAUs of 367 million rose 26%. However, the company expects a slowdown in the next quarter, with its AMU growth rate likely to be around “mid-teens”.

Even with the growing user base and a 78% increase in year-over-year sales in the last quarter to $ 485 million, the company still recorded a net loss of 22 millions of dollars. While this is a fraction of the $ 141 million loss it suffered a year earlier, as the economy recovers and people return to their usual ways, there may be -be less time to spend on Pinterest and lower MAU. If that happens, the company’s progress on its bottom line could stall.

Pinterest has been a popular home action, but could now turn into a risky buy given its high valuation; currently, the growth stock is trading at over 22 times its revenue – the average stake in the SPDR Technology Select Sector Fund is trading at a multiple less than 7.