JPMorgan analysts recently provided a comprehensive list of stocks that they believe are poised to decline, offering investors opportunities to capitalize on overvalued shares. The list spans various sectors, including airlines, restaurants, dating apps, and technology companies, as stocks remain near recent highs.
Short-selling, a strategy that involves borrowing shares to sell them at current prices with the intent to repurchase at lower prices, has become a focal point for some investors looking to profit from anticipated declines. This week, JPMorgan’s analysts curated a list of 27 stocks as potential short-selling candidates heading into the fourth quarter, highlighting concerns about the valuations and market dynamics of various companies.
Among the notable targets is Southwest Airlines (LUV), which has seen its stock decrease approximately 7% this year, contrasting sharply with the S&P 500’s rise of roughly 12%. The analysts noted that the airline is undergoing a significant shift from its long-established brand while also offering bold guidance for the fourth quarter. While demand trends appear encouraging, they expressed apprehension regarding the stock’s valuation against these ambitious projections.
The burger chain Shake Shack (SHAK) also made the list, with its shares plummeting nearly a third in value this year. Analysts raised concerns about the potential impact of high menu prices on customer growth and frequency of visits, suggesting these factors could constrain the company’s market potential. Visible Alpha’s average price target of $133 suggests a significant upside, but the analysts question whether the chain can capture that market.
In the realm of tech and dating services, Bumble (BMBL) has seen its stock value shrink nearly 40% this year. Analysts indicated that a decline in user engagement on the Bumble app, coupled with rising marketing expenses, may adversely affect profit margins. Although the average price target sits at about $7, reflecting a potential rise, the current dynamics pose significant challenges.
Electric vehicle manufacturer Rivian (RIVN) is another entity under scrutiny, with a stock decrease of about 4% this year. JPMorgan analysts expect the expiration of federal EV tax credits to hinder demand, alongside regulatory changes affecting Rivian’s financial strategies, specifically its ability to sell regulatory credits profitably.
Other stocks flagged by JPMorgan analysts include Krispy Kreme (DNUT), which is grappling with balance-sheet challenges, and Travelers (TRV), which they cautioned is facing unrealistically optimistic consensus estimates. Additionally, they highlighted Snap (SNAP) for its struggles against AI-driven competitors and Mobileye Global (MBLY) for a premium valuation that does not align with its revenue growth expectations.
As investors navigate these market signals and the potential for stock downturns, the insights from JPMorgan serve as a notable resource for those considering short-selling strategies as a means to respond to current economic conditions.
