4 Overvalued Recent IPOs To Avoid In September

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Last year was a great year for IPOs thanks to a low-interest-rate environment and quick and low-cost listing options, such as special purpose acquisition companies (SPACs). In total, 480 companies went public last year. The number has been even higher so far this year. According to Stock Analysis, there have been 742 IPOs so far this year.

However, the Federal Reserve could raise interest rates as early as 2023, and recently indicated its willingness to reduce asset purchases before the end of the year. In addition, Investors’ concerns over the economic recovery due to the resurgence of COVID-19 cases and high inflation could pose a threat to many recently listed stocks.

Investor optimism over recently-listed stocks Robinhood Markets, Inc. (HOOD), SentinelOne, Inc. (S), Full Truck Alliance Co. Ltd. (YMM), and Traeger, Inc. (COOK) has helped them reach price levels that don’t justify their recent financial performance and growth prospects. So, these stocks are best avoided now.

Robinhood Markets, Inc. (HOOD)

Zero-commission trade pioneer HOOD allows its users to invest in stocks, exchange-traded funds, options, gold, and cryptocurrencies via its platform. Its shares rallied to hit their all-time high of $85 on Aug. 4, after falling 8% on its stock market debut on July 29, 2021. However, it has declined significantly since then.

HOOD’s revenue increased year-over-year to $565.33 million for the fiscal second quarter that ended June 30, 2021. However, the company’s operating expenses increased year-over-year to $500.73 million. In addition, its net loss came in at $501.66 million compared to a net income of $57.58 million in the prior-year quarter. Also, its loss per share came in at $2.16 compared to an EPS of $0.09 in the year-ago period.

In terms of forward P/S, HOOD’s 18.09x is higher than the industry average of 3.19x. Likewise, the stock’s forward P/B of 70.21x is higher than the industry average of 1.13x.

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