After a rough year, there are plenty of tech stocks to sell. Unfortunately, investors now know that inflation is persistent. Nearly all central banks around the world raised interest rates. Some fintech firms already showed signs of strain. And most are simply not prepared for the monetary tightening that could persist. Plus, there’s now a higher risk of loan defaults.

That being said, investors need to get out of unproven fintech before their share prices fall even more. Although they all lost more than half their value in 2022, their prospects will likely worsen in 2023. Here’s our top list of tech stocks to sell now.

Tech Stocks to Sell: Affirm Holdings (AFRM)

One of the top tech stocks to sell is Affirm Holdings (NASDAQ:AFRM), which lost over 90% of its value over the last year. Unfortunately, rising financing costs could hurt its business model again in the year ahead. Worse, as the economy worsens, consumers will have weaker buying power, hurting Affirm’s transaction volumes.

AFRM stock traded above $160 a share in late 2021 when markets thought its revenue growth would exceed costs. Now, credit card debt will limit the consumer’s buying. Investors are also far more cautious about Affirm’s prospects. In its first fiscal quarter, Affirm posted GAAP earnings per share loss of 86 cents. Revenue rose by 34.2% year over year to $361.62 million. Its gross margin is below the fintech average, as its cash burn increased to $220 million.

Tech Stocks to Sell: Ally Financial (ALLY)

Ally Financial (NYSE:ALLY) is being hurt by its exposure to Carvana’s (NYSE:CVNA) automotive loan business. In fact, when Carvana’s consumers fail to meet their debt obligations, expect Ally Financial to increase its assumptions. Unfortunately, when credit performance worsens, Ally needs to write off those losses.

ALLY stock lost almost half its value in 2022. Also, markets are bothered by Ally Financial’s exposure to the auto business. In 2023, the company needs to sustain excess capital to strengthen its balance sheet. This will limit its stock buybacks. Expect bears to pressure the stock as selling volumes intensify. Ally Financial reported $12.3 billion in consumer automotive loan originations. Expect this to fall as auto demand falls in 2023.

Tech Stocks to Sell: Block (SQ)

Another one of the top tech stocks to sell is Block (NYSE:SQ), which lost 62% of its value in 2022 and is still overvalued. In the third quarter, Block posted a non-GAAP EPS of 42 cents. Revenue rose by 17.7% Y/Y to $4.52 billion. Although the business is growing significantly, Block needs to invest heavily to develop products. In 2023, Chief Financial Officer Amrita Ahuja said that company plans to significantly moderate its expenses. Block needs to spend less on marketing and product creation as the economy slows. The market will react negatively to the revenue slowdown. This could pressure shares further.

Block’s banking products face significant pressure. For example, its CashApp is a central financial service. Traditional banks and credit card firms could offer better terms to merchants. This would threaten the monthly active users on CashApp Card.

LendingClub (LC)

LendingClub (NYSE:LC) posted revenue of $304.9 million in its last quarter ended Sept. 30, 2022. It grew its revenue and earnings thanks to recurring interest income and improved efficiency. Investors need to watch LendingClub’s loan yields closely. Loan yields fell modestly. After interest rates rose quickly, unsecured personal loans will fall while interest-earning assets rise. However, as the company increases its mix toward lower risks, revenue growth will slow.

LendingClub will have a higher cost of funding. It might need to offer higher yields on its savings products. This will decrease earnings on interest. The credit card business will face more competition. Fortunately, credit costs are lower. But as credit card debt rises, investors may worry about loss provisions increasing too.

LC stock lost over 60% of its value in 2022. The stock is on a steady downtrend. Sellers decreased their position after every big rally, a bearish signal. Expect the negative pattern to continue.

OneMain Holdings (OMF)

OneMain Holdings (NYSE:OMF) acquired Trim, a financial wellness fintech in April 2021. Installment lending is its core business in the nonprime credit market. In the third quarter, OneMain posted revenue growing by 3.9% Y/Y to $1.07 billion. The firm wants to capitalize on competitors exiting its market. This creates less supply and allows OneMain to take advantage of its strong balance sheet.

Investors are less confident. In the nonprime market, delinquencies could rise as the recession worsens in the year ahead. Markets will avoid companies that hold lots of unsecured debt. To manage those risks, OneMain needs to increase its reserves. It already projected lifetime gross losses for its delinquent receivables.

OneMain’s Current Expected Credit Losses (or CECL) could rise as the macroeconomic landscape weakens. Investors need to brace for updated unfavorable reserve models next. This increases the risks of holding OMF stock.OMF stock lost nearly one-third of its value in 2022. Despite trading in the single-digit P/E, shares still have substantial risks.

SoFi Technologies (SOFI)

SoFi Technologies (NASDAQ:SOFI) lost 71% of its value in 2022. SoFi investors are hoping that the stock holds the $4.60 level. Unfortunately, bears are ahead with a profitable trade. The short interest is 13.6%. SoFi wants to impress shareholders with its high engagement numbers through its financial services business. It has member products whose uptake risks as user activity increases. However, the fintech needs to discontinue products that do not create value.

SoFi depended on growing its customer base by offering value products. Customers that have low deposit balances will limit lifetime profit margins. Still, the company added around $5 billion in total deposits in the third quarter.

Investors are not certain that SoFi’s low cost of funding its business is sustainable. For example, the company created SoFi Plus. This new membership gives new customers a welcome offer, premium interest rates, rewards, and discounts. This increases the cost of acquiring customers. It also hurts the interest income earned on deposits.

Upstart (UPST)

Shares of Upstart (NASDAQ:UPST) recently posted a non-GAAP EPS of -$0.24. Revenue plunged by 31.0% year over year to $157.23 million. The firm issued a Q4/2022 revenue forecast in the range of $125 million to $145 million. This is nowhere near the $185 million consensus estimate. Upstart has funding environment dislocations that will not resolve themselves. The weak economy will pressure Upstart’s marketplace structure. More lenders on the platform will close fewer deals amid the volatility.

The cost of funds is rising while spreads continue their volatility. This uncertainty hurts Upstart’s deal closing rates. Furthermore, on-balance sheet loans continue to rise. Investors will grow increasingly concerned as interest rates pressure Upstart’s balance sheet. Markets dislike uncertainty. The poor results will get worse next quarter. Defaults will increase, hurting Upstart’s portfolio performance. The company will need to increase its annual percentage rate. This decreases the customer’s appeal to borrow from Upstart.

On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.