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David Jagielski, The Motley Fool
4 min read
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The stock market is in a bit of a tailspin of late as investors worry about the future of the economy. It can be a great idea to buy stocks on weakness if you’re investing for the long term, but that doesn’t mean that every struggling stock is going to recover.
Three stocks that are down big this year but that investors should think twice about buying right now are SoundHound AI (NASDAQ: SOUN), Maravai LifeSciences (NASDAQ: MRVI), and Victoria’s Secret (NYSE: VSCO). Here’s why these stocks are struggling this year, and why they may not be worth buying despite their discounted valuations.
Voice artificial intelligence (AI) company SoundHound went from being a hot stock in 2024 to now being in a freefall. Investors loaded up on the stock last year when they learned that chipmaker Nvidia had invested in the business. But now, with Nvidia selling its stake, investors are once again following in the tech giant’s path and also unloading their shares of SoundHound.
SoundHound’s stock is now down more than 55% since the start of the year. Arguably, some sort of a correction is warranted, given that it spiked a mammoth 836% last year. And there are still big question marks around its operations, such as whether SoundHound will be able to provide a competitive product amid a growing number of AI companies offering similar solutions.
The company is undeniably generating strong growth. Last year, its revenue soared 85% to $84.7 million. But that was also with the aid of acquisitions, and it posted an adjusted net loss of $69.1 million — 19% higher than a year ago. SoundHound faces an uncertain path ahead, and while it is growing, whether it can do so organically is debatable. Investors shouldn’t overlook its losses.
Another struggling stock is Maravai LifeSciences, which is also down around 55% this year. The healthcare company experienced a boom amid the pandemic as demand for its nucleic acid products soared, helping in the development of mRNA vaccines. But now, sales have been slowing down.
The company has postponed the release of its year-end earnings to next week, but the results have been far from impressive of late. Over the nine-month period ending Sept. 30, 2024, its revenue totaled $202.8 million and was down 6% year over year. Meanwhile, the company incurred an operating loss totaling $197.5 million — including $154.2 million in goodwill impairment charges.
With an uncertain path forward and future profitability a big question mark, investors shouldn’t assume the stock has reached a bottom. Things could get worse for Maravai as the year goes on.