S&P 500 investors hate companies that lose money right now. So it's wise to know which companies are on the verge of losing obscene amounts so you don't end up holding the bag.
XAnd some whoppers of losses are coming. Analysts think 14 companies in the S&P 1500 and S&P Completion Markets, including Uber Technologies (UBER), Rivian Automotive (RIVN) and Carnival (CCL), will post massive adjusted losses this year of an eye-watering $1 billion or more, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. And that's not to mention the parade of money-losers like Coinbase Global (COIN), Peloton Interactive (PTON) and Robinhood (HOOD).
Investors are fed up with losses, too, especially of this size. Shares of the 14 companies expected to lose the most money this year are down an average of 60% this year. That's roughly three times worse than the S&P 500's 23% drop this year.
"Wall Street is realizing that we won't be seeing a significant sign that inflation is easing fast enough in the next couple of months and that should make it tough to buy the dip just yet," said Edward Moya at Oanda.
Losses Matter To S&P 500, Other Investors
Future growth is out. Profit, dividends and cash flow are in. Cash in hand now is worth much more than profit years down the road due to spiking interest rates.
There's no doubt investors are avoiding companies losing money. Unfortunately, there are many such potholes for investors to avoid. Nearly 1,200 companies in the S&P 500, S&P 400, S&P 600 and S&P Completion indexes, are expected to lose money this year. That's a staggering third of the universe with valid earnings forecasts for 2022. And shares of these money-losing companies are down 46% on average this year, much worse than the index.
And it's not just little, struggling companies bleeding red ink. Shares of the nine stocks in the big-cap focused S&P 500 expected to post adjusted losses in 2022 are down an average of 33% this year. That's much worse than the S&P 500's drop in that time.
It's wise to pay attention to investors' concern over losses.
Uber: Uber-Size Money Loser
The only thing uber about Uber in the eyes of investors now is the magnitude of its expected loss in 2022.
Analysts think the ride-sharing turned food delivery service will lose a mind-boggling $7.2 billion this year on an adjusted basis. That's the largest loss anticipated from any of the stocks in the major indexes. Almost equally shocking is that this is the just the latest in a string of giant losses at the company. It's the largest adjusted loss in its history, which is saying something. Uber lost $5 billion in 2020 and $3.1 billion in 2019.
Investors just want nothing to do with these kinds of losses. Shares of the company are down more than 35% this year.
Electric Car Company, Cruise Ships Spark Huge Losses
Remember when investors thought Rivian Automotive had a shot at taking on Tesla (TSLA) in the S&P 500? Yeah, no one else does either.
Shares of Rivian lost more than two-thirds of their value in a bruising crash this year. Why? Analysts think Rivian will lose nearly $6.7 billion this year. That's pretty impressive — in a bad way — if you consider its more than double the $3 billion it already lost in 2021. That's in stark contrast with Tesla, which analysts think will earn an adjusted $14 billion this year alone.
Cruise ship operators, too, are accidents waiting to happen, too. Take one of the largest: S&P 500 member Carnival. The company is expected to lose $4.1 billion this year. Yes, that's an improvement from 2021 when the company lost nearly $8 billion. But it's not the direction S&P 500 investors want to be headed in now. Shares of Carnival lost more than half their value this year.
And investors have been throwing many of the hyped new company darlings overboard, too. Most are losing money, and lots of it. That just doesn't work with investors now. Coinbase Global is down 75% as it looks to lose $1.8 billion this year. Peloton Interactive, facing a $1.2 billion loss this year, is down 77%. And Robinhood is down 47% as investors aren't willing to wait around as it loses $1.2 billion this year.
Money-losing is out. And the sooner you get out of the way of these giant losses, the better for your portfolio.
Biggest Losses Coming In 2022
S&P 1500 and Completion Index companies expected to lose $1 billion or more this year
| Company | Ticker | Adjusted net loss expected (in 2022, $ billions) | Stock YTD % ch. | Sector |
|---|---|---|---|---|
| Uber Technologies | (UBER) | $7.2 | -35.8% | Industrials |
| Rivian Automotive | (RIVN) | 6.2 | -67.3 | Consumer Discretionary |
| Carnival | (CCL) | 4.2 | -55.8 | Consumer Discretionary |
| Ginkgo Bioworks Holdings | (DNA) | 1.9 | -66.2 | Materials |
| Norwegian Cruise Line Holdings | (NCLH) | 1.8 | -35.6 | Consumer Discretionary |
| Royal Caribbean Cruises | (RCL) | 1.8 | -42.8 | Consumer Discretionary |
| Coinbase Global | (COIN) | 1.8 | -75.5 | Financials |
| WeWork | (WE) | 1.7 | -64.1 | Real Estate |
| Carvana | (CVNA) | 1.5 | -89.5 | Consumer Discretionary |
| Lucid Group | (LCID) | 1.5 | -63.1 | Consumer Discretionary |
| Core Scientific | (CORZ) | 1.3 | -87.4 | Information Technology |
| Peloton Interactive | (PTON) | 1.2 | -77.0 | Consumer Discretionary |
| Boeing | (BA) | 1.2 | -36.7 | Industrials |
| Robinhood Markets | (HOOD) | 1.2 | -47.8 | Financials |
Sources: IBD, S&P Global Market Intelligence
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September 27, 2022 at 07:00PM
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