After a blistering run in this year’s first half, the stock market has changed. Many high-flying stocks have taken a turn for the worse since the dog days of summer and are now flashing warning signs to investors. The red flags that have cropped up for these Nasdaq stocks to sell range from overinflated valuations to macroeconomic concerns.
Regardless, many well-known stocks are now in need of a reevaluation. This is especially true among technology stocks that have enjoyed the biggest bull run this year. Now is an ideal time for investors to look closely at the holdings in their portfolio with the major stock indices treading water in the month of September. Here are three Nasdaq stocks to sell that are waving massive red flags.
Arm Holdings (ARM)
It just had its initial public offering (IPO) on September 14, but already the share price of British microchip and semiconductor designer Arm Holdings (NASDAQ:ARM) is falling sharply amid worrying signs. The company priced its IPO at $51 a share and the stock quickly jumped 25% on its market debut to close its first trading day at $63.59. During the day of its IPO, ARM stock got as high as $69 per share. However, the price has quickly pulled back and fallen nearly 10% from its September 14 close.
Concerns have been raised about Arm Holdings’ valuation after it shot up to $65 billion on its debut. ARM stock’s price-to-earnings ratio sits at 110x based on its most recent fiscal year profit. That’s higher than rival chip designer Nvidia’s (NASDAQ:NVDA) valuation, which is at 108 times earnings after that stock tripled year-to-date. Another red flag for Arm Holdings is that the company is heavily exposed to China, with a quarter of its sales coming from the nation of 1.4 billion people.
Apple (AAPL)
Shares of Apple (NASDAQ:AAPL) are struggling to recover from some big problems that have cropped up for the company. These include the Chinese government in Beijing banning civil servants from using iPhones for work purposes. France placed a ban on 2020 model iPhones over concerns about radiation emitted from the devices. There is a general slowdown in sales of all its electronic devices. Skepticism is mounting over if Apple’s new augmented reality headset will be a hit with consumers. And, the reveal of the iPhone 15 received a lukewarm reception.
These issues have conspired to drag AAPL stock lower in recent months. After achieving a $3 trillion market capitalization this spring and then hitting a 52-week high at the end of July, AAPL stock has fallen 10%. The company’s valuation is back below $3 trillion and many analysts are wondering aloud where Apple goes from here? The answer to some seems to be services, as offerings such as Apple TV and Apple Pay help the company compensate for declining sales of devices that include the venerable iPad and Apple Watch.
Over the past 12 months, AAPL stock has risen 15%. That compares to many other mega-cap tech stocks such as Nvidia and Meta Platforms (NASDAQ:META) whose share prices have more than doubled in the same time span.
Moderna (MRNA)
It wasn’t long ago that Moderna (NASDAQ:MRNA) helped save lives with the creation of a Covid-19 vaccine. In late 2020 and early 2021, MRNA stock was the best performing security in the Nasdaq exchange, having risen more than 1,500% to an all-time high of $450 a share. Since then it has become one of the Nasdaq stocks to sell from your portfolio. MRNA stock has plunged 77% from its high, including a 42% decline this year. On Sept. 18, the share price dropped 9% on news that company’s co-founder and board chairman Noubar Afeyan sold 15,000 shares of MRNA stock.
Other red flags for MRNA stock include declining demand for Covid-19 vaccines around the world. Rival Pfizer (NYSE:PFE) recently forecast that it expects only about a quarter of the U.S. population will get a Covid-19 vaccine this autumn and winter as infection rates spike. Moderna’s share price is also falling on concerns about the company’s pipeline. To date, the Covid-19 vaccine is the only medication the company has successfully brought to market. Other medications, including a vaccine against influenza, remain in development.
On the date of publication, Joel Baglole held long positions in AAPL and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.