How a Tesla stock decline could hammer 'zombie stocks' like GameStop and Peloton
Tesla shares could decline dramatically — and that could mean disaster for a number of stocks that have already seen deep share-price cuts, according to equity research firm New Constructs.
The research firm, which uses machine learning and natural language processing to parse corporate filings and model economic earnings, called the stocks in danger “zombie stocks,” and defined them as companies with poor business models that are burning cash at an alarming rate and are at risk of seeing their stock decline to $0 per share.
“Its valuation remains nosebleed high because the cash flow expectations baked into the stock price are unreasonably optimistic,” Trainer wrote. “Our message to investors is to take profits in Tesla and avoid zombie stocks at all costs.” New Constructs recently added cloud-based communication company RingCentral Inc. RNG, +6.72% to its list of “zombie” stocks. Other companies on the list are Freshpet Inc. FRPT, -1.91%, Peloton Interactive Inc. PTON, +7.46%, Carvana Co. CVNA, +7.58%, Snap Inc. SNAP, +7.51%, Beyond Meat Inc. BYND, +0.40%, Rivian Automotive Inc. RIVN, +6.37%, DoorDash Inc. DASH, +6.87%, Shake Shack Inc. SHAK, +3.18%, Chewy Inc. CHWY, +8.70%, Uber Technologies Inc. UBER, +4.31%, Robinhood Markets Inc. HOOD, +2.