3 Stocks That Are Actually Worth Shorting for Endless Gains

InvestorPlace04-08

These zombie stocks are on their last legs and diluting shareholders into oblivion, just to stay afloat a little longer. Mullen Automotive (MULN): Egregious dilution and massive losses make this EV ...

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04-08
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04-08
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href=https://investorplace.com/2024/04/3-stocks-that-are-actually-worth-shorting-for-endless-gains/><strong>InvestorPlace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>These zombie stocks are on their last legs and diluting shareholders into oblivion, just to stay afloat a little longer.\nMullen Automotive (MULN): Egregious dilution and massive losses make this EV ...</p>\n\n<a href=\"https://investorplace.com/2024/04/3-stocks-that-are-actually-worth-shorting-for-endless-gains/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU1720051108.HKD","symbol_name":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) 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legs and diluting shareholders into oblivion, just to stay afloat a little longer.\nMullen Automotive (MULN): Egregious dilution and massive losses make this EV startup a prime short candidate.\nBeneficient (BENF): Racking up huge losses and well below listing requirements, more dilution is likely on the horizon.\nCareMax (CMAX): Bleeding cash relentlessly with no path to profitability until 2031 at the earliest, if it even survives.\n\n\n\n\n\n \n\nSource: Borka Kiss / Shutterstock.com\n\n\n\nThere’s an old Wall Street adage that says “the market can stay irrational longer than you can stay solvent.” We saw that play out time and again with certain beaten-down stocks. Just when you think they can’t possibly go any lower, they find new depths to plumb.\nRetail investors often mistake these relentlessly-declining stocks as bargains, thinking they’re getting a once-in-a-lifetime discount. In reality, these are nothing more than value traps waiting to snare the unsuspecting. The single biggest culprit? Dilution.\nMany companies are essentially paralyzed – generating little to no revenue while burning through cash like a drunken sailor. With sketchy fundamentals like that, you’d think management would be doing everything to right the ship. Instead, many of these companies continue diluting shareholders into oblivion, just to keep the lights on for a few more quarters.\nIt’s a vicious cycle that has plagued many a struggling business. They dilute, reverse split, rinse, and repeat until your stake is all but obliterated. Indeed, shorting these stocks can generate perpetual gains, in theory, if they go to zero. However, one ill-timed short squeeze can leave your positions under water, and fast.\nThat said, if you spread your short bets across multiple companies exhibiting these dreadful traits, the odds start tilting in your favor. Here are three stocks worth shorting for endless gains.\nMullen Automotive (MULN)\nSource: Ringo Chiu / ShutterstockMullen Automotive (NASDAQ:MULN) has been one of the most egregiously-dilutive stocks in an industry already notorious for cash-burning startups living out their last days through endless capital raises. Lower interest rates could provide a much-needed jolt to spur EV demand. But let’s be real here – rate cuts alone won’t be enough to resuscitate a zombie company.\nMullen’s case is particularly dire. As a pre-revenue company, the sheer amount of cash the company is hemorrhaging is staggering. Mullen posted losses of $972 million in 2023 with a measly 141 Class 3 vehicle deliveries to show for it. To call their operations “shady” would be an understatement akin to describing the Sahara as “a bit dry.”\nEven if we suspend disbelief and imagine a scenario where Mullen somehow transforms into the next Tesla (NASDAQ:TSLA), the stock’s dilution has been so extreme that current shareholders would be left with crumbs.\nBeneficient (BENF)\nSource: Tendo / ShutterstockNext up, we have Beneficient (NASDAQ:BENF) – a company that has clearly not been so “beneficient” to its long-suffering shareholders. Their offerings include unlocking liquidity for alternative assets, fiduciary financing, custody services, and so on.\nHere’s the kicker though – this enterprise managed to deliver negative $105 million in revenue for the full year 2023. Beneficient also racked up $131 million in losses to boot. \nWith a minuscule $15.5 million market cap, Beneficient is undoubtedly on its last legs. BENF stock is already well below Nasdaq’s listing requirements, so brace yourselves for more reverse splits and dilutive capital raises on the horizon.\nI’m sure there are far more solvent and competent firms out there that could “unlock liquidity” for your alternative assets. Shorting this stock is the only position I’d recommend taking in this case.\nCareMax (CMAX)\nSource: Rido / ShutterstockCareMax (NASDAQ:CMAX) is a healthcare company focused on providing value-based care for seniors on Medicare Advantage plans. If you’ve been invested in any healthcare stocks recently, you’ve likely seen some losses thanks to disappointing Medicare reimbursement rates. But CareMax takes underperformance to a whole new level.\nThis stock has been bleeding cash relentlessly since early 2021, with no discernible way out of its death spiral. In 2023 alone, CareMax racked up an eye-watering $683 million in losses. And with a puny $17 million market cap and just $65 million in cash reserves, the writing is on the wall for this company.\nEven the most optimistic of analyst projections don’t forecast profitability for CareMax until 2031 at the earliest. And let’s be honest here, with that kind of cash burn rate, CareMax will be six feet under long before then unless a miracle occurs.\nI get it, value-based care for seniors is a noble cause. But when a company is posting these kinds of losses with no clear path to sustainable profits, it’s time to cut your losses and run for the hills.\nPenny Stocks\nOn Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.\nRead More: Penny Stocks — How to Profit Without Getting Scammed\nOn the date of publication, Omor Ibne Ehsan did not hold (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.\nOmor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.Consumer Discretionary, Automotive, Electric Vehicles, Financial, HealthcareGrowth Stocks\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/2024/04/3-stocks-that-are-actually-worth-shorting-for-endless-gains/.\n©2024 InvestorPlace Media, LLC","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":292828640718984,"gmtCreate":1712517708058,"gmtModify":1712517712093,"author":{"id":"3581739669572288","authorId":"3581739669572288","name":"MeHu","avatar":"https://static.tigerbbs.com/c0a2218ae6aba5dc7d18da15534ac20f","vip":1,"crmLevel":6,"crmLevelSwitch":1},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/292828640718984","repostId":2425647553,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":292789896151352,"gmtCreate":1712508349482,"gmtModify":1712508351486,"author":{"id":"3581739669572288","authorId":"3581739669572288","name":"MeHu","avatar":"https://static.tigerbbs.com/c0a2218ae6aba5dc7d18da15534ac20f","vip":1,"crmLevel":6,"crmLevelSwitch":1},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/292789896151352","repostId":2425647553,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":2,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2425647553"}