As I’ve flagged several times before, not all penny stocks are bargains. But I could find a penny stock that is actually overvalued! I’m looking for two main types here. Firstly, stocks that have fallen significantly, so that the share price is now below £1. Secondly, stocks that are performing well, and might break above the £1 mark soon. Here are two examples where I’d consider investing a total of £1,000 this month.

A penny stock that has halved in value

First up is Made.com Group (LSE:MADE). It has a share price of 96p at the moment, having fallen from its IPO price of 200p last spring. This is a hefty slump in less than one year, as the company has battled with supply chain disruptions. 

In the December trading update, it revised down revenue and adjusted EBITDA. In fact, adjusted EBITDA went from being positive to having a forecasted negative £12m-£15m figure attached.

This is the key risk going forward, in that the business struggles to get products to customers. However, it said that regarding the supply chain “the group has built stock positions to deliver significantly better lead times to consumers for 2022 and beyond as orders placed with suppliers are now in or close to our warehouses.”

Another update on financials in January showed that gross sales are up 38% year on year, highlighting that demand is there from consumers. Therefore, if the supply chain issues can be resolved, I think the penny stock could see the share price climb from current levels.

An idea on the lithium surge

The second company that I’d put £500 in is Zinnwald Lithium (LSE:ZNWD). I recently wrote about lithium stocks in more detail, that can be read here. The reason why I like the businesses that it’s at the exploration end of the sector. Given the large rise in the price of lithium over the past six months, the company should be able to benefit from this.

The project is located in Germany, with approved licenses and a mine life of 30 years. Zinnwald specifically is catering to “supply high value lithium products to Europe’s rapidly growing EV and energy storage markets.” Given the growth in the electric vehicle (EV) market in the past year, I’ve no doubt about the demand going forward.

The penny stock has seen the share price rally 27% in the past year. Yet at 16p, there’s still plenty of room to run higher before it trades above 100p. I personally don’t think that the stock is on many investors’ radars. If and when it does, then the share price could take off.

However, I do need to be conscious of the risks. This isn’t a stable play by any means. If the project doesn’t pay off as expected, or if the EV sector develops to a stage where lithium isn’t a key need, Zinnwald could really struggle.

Jon Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Since the pandemic began, education and its delivery methods have changed. With this in mind, I want to know if FTSE 100 incumbent Pearson (LSE:PSON) could be a good addition to my holdings. Let’s take a look.

Publishing and educational materials

Often best known as an international publishing house, Pearson actually makes most of its money from the educational arm of the business through its e-learning and educational materials. It has a presence in over 200 countries and is supported by approximately 20,000 employees. 

As I write, Pearson shares are trading for 616p. At this time last year, the shares were trading for 723p, which is a 14% drop over a 12-month period.

For and against investing

FOR: Pearson’s recent performance tells me that a pandemic-related hangover could be a thing of the past and things have turned a corner. In addition to this, there could be some growth opportunities in the future. Pearson reported in a post close update that sales were up by 8% and demand was high. It expects to report a profit of £385m, up 33% from last year.

AGAINST: I believe Pearson’s biggest threat is competition. Many smaller firms have been attempting to gain market share and prize this away from the FTSE 100 incumbent. Pearson is dominant right now, but a serious competitor emerging with a new product or solution for educational materials could hinder any growth and returns.

FOR: Pearson is in a great position in its marketplace, despite other firms attempts to chip away at its dominance and market share. Its brands are highly respected throughout the world and known for their quality. I believe it can leverage its position to dominate the market in the coming years. As the pandemic eases and economic recovery continues, and as the world continues to digitise, Pearson could grow and provide some lucrative returns.

AGAINST: At the height of the pandemic, Pearson’s growth was an issue as educational enrolment slowed. There is a risk that even though the pandemic may ease, there could be less demand for higher education services, and less demand for its products in the years ahead. These days youngsters have many more options than going straight into higher education after leaving school. This could hurt demand for Pearson.

A FTSE 100 stock I’d buy

Due to macroeconomic factors in recent months, there has been a stock market correction. This has actually thrown up some bargains and I have changed my position on stocks I previously would not have considered for my holdings. Pearson is one of them after its recent results and outlook ahead as well as some other fundamentals. 

At current levels, I think Pearson could be a good stock for my holdings and I would buy the shares. As well as its excellent market leading position, recent results point towards high demand and growth for the future. The shares also currently look cheap with a price-to-earnings ratio of just 16. Finally, as a bonus, Pearson sports a dividend yield of 3%, which would make me a passive income too. It is worth noting the FTSE 100 dividend yield average is 3%-4%.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Pearson. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Key points

• Oil price has topped $90 for the first time since 2014
• 2 FTSE 250 oil stocks could provide exposure to this trend
• Both companies are actively producing and exploring in many regions around the world

The West Texas Intermediate (WTI) and Brent crude oil benchmarks have both just broken the $90 barrier. This means that oil surpassed its previous, pre-Omicron high of $85. With tightening oil supplies, I think this could be a good destination for my investment funds. To gain exposure to the oil price, I like to invest in equities and have found two attractive stocks on the FTSE 250 index. Could they help to grow my portfolio? Let’s take a closer look.

Why has oil surpassed $90?

For the first time since 2014, the oil price has moved above $90. There are a number of reasons for this. Firstly, there are worries about supply. Only this week, the Organisation of the Petroleum Exporting Countries (OPEC+), agreed to maintain its monthly output increase of 400,000 barrels per day. In real terms, however, a number of OPEC+ members are struggling to meet this increase as they try to ramp up production.

Meanwhile, heightened tensions in Ukraine have deepened production fears. There is a possibility of war involving Russia and Western states, and this could have a severe impact on oil production capabilities in the region. The two FTSE 250 oil stocks could expose me to this oil dynamic.

Demand-wise, cold winter storms having been hitting much of the US. While this has increased demand for oil, there are also supply-side concerns. With frigid weather forecast to even hit Texas, there are worries that production in this area will be negatively impacted.

2 FTSE 250 oil stocks that could fly

Seeking to capitalise on this oil price rise, I’m turning to the FTSE 250 to find some oil stocks. The first company, Capricorn Energy (LSE: CNE), is focused on production in Egypt. It also has ongoing exploration activities in the North Sea, South America, and West Africa. 

Only last month, the company announced that production in Egypt had increased 8% between September and December 2021, beating expectations. Results from other drilling sites are expected in mid-2022. 

With a debt-to-equity ratio of 0.33, this is stronger than a FTSE 100 oil stock like BP, which has a figure of 1.43. That said, Capricorn Energy has seen its earnings slide over the five calendar years from 2016 to 2020.

The second FTSE 250 oil stock I like is Harbour Energy (LSE: HBR). This company operates in the UK, South America, and Asia. Berenberg recently upgraded the stock on account of its “significant free cash flow”, stating that it could have “a net cash balance sheet by 2024”. That said, it does have a not insignificant net debt pile of $2.6bn.

Producing around 175,000 barrels per day, Harbour Energy has an operating cost of only $15.6 per barrel. While some of the oil produced is hedged at $58 per barrel, the company will be benefiting from the higher oil prices globally. 

Oil prices are surging. These two FTSE 250 stocks will provide me with exposure to this trend. I will be buying both as the oil price tops $90, in the hope of further gains to come. 

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

According to Statista, the UK gaming industry is worth £6bn and it is only set to grow. With that in mind, is FTSE AIM incumbent Team17 (LSE:TM17) worth adding to my holdings? Let’s take a closer look.

Gaming on the rise

Team17 is a British video game development company with a two-pronged approach. It creates and develops many well-known, premium games, but also partners with smaller independent developers to help them access the lucrative gaming market. As I write, it has over 90 games in its portfolio. Some of its best known titles include the Age of Darkness franchise, and Hammerting.

As I write, Team17 shares are trading for 718p. At this time last year, the shares were trading for 12% higher, at 818p. Many FTSE stocks have experienced their share price’s meandering due to current macroeconomic issues causing a stock market correction. 

For and against investing

FOR: Team17’s performance, recently and historically, has been excellent. I do understand that past performance is not a guarantee of the future, however. Looking back, it has seen revenue and gross profit increase year on year for the past four years. Coming up to date, a trading update released in January for the year ending 31 December was good. Performance exceeded management expectations. Full detailed results are due at the end of March and will show just how well Team17 did. Most of the FTSE stocks I am reviewing have a good track record of performance.

AGAINST: Although a lucrative market, the gaming industry is extremely competitive and includes many well known companies that produce blockbuster titles and have done so for many years. Names such as Microsoft and Electronic Arts spring to mind. Team17 is a smaller firm compared to these and could be out-muscled and outmanoeuvred in the long term. Gaining market share from household names is not easy.

FOR: A recent study conducted by global consultancy firm Accenture reported that the gaming industry has seen its numbers increase by half a billion players in the past three years. It is also predicting a further 400m new gamers by the end of 2023. Team17’s continued growth and success in a lucrative, burgeoning market could help boost its performance and any returns I hope to make.

AGAINST: At current levels, the Team17 shares look a tad expensive. It sports a price-to-earnings ratio of 42. This usually tells me two things. Firstly, any growth expected ahead could already be priced in. Next, there is a risk that market issues as well as any negative news could have a detrimental impact on the share price and overall investor sentiment. An example of this would be a flagship game receiving a negative review or reaction.

A FTSE stock I’d buy

Overall, I like Team17 shares for my holdings and would buy them. I keep an eye on growth markets and as a keen gamer myself, it is an industry I like to watch in particular. I like Team17’s approach with its indie gaming market accessibility with partnerships with newer developers. The gaming market is only set to grow and the FTSE AIM incumbent could end up commanding a decent slice of a very big pie, in my opinion. This could lead to increased performance and some nice returns for my holdings.

Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Argo Blockchain (LSE: ARB) shares fell 23% in January, taking them to a 12-month decline of 25%. But that hides a far more riveting picture, as 12 months ago the Argo Blockchain share price was just beginning to soar. It reached an all-time high of 360p in February, before the downwards slide set in.

From that 2021 peak, Argo shares had lost a painful 79% by the end of January. So what’s behind Argo’s continuing poor performance in the new year so far? And does the price fall mean I should buy?

The declining Bitcoin price is a part of the picture, dropping 17% during January. But since the day Argo shares sat at their 2021 high, the cryptocurrency’s value dropped by 33%. That’s less than half the Argo share price fall over the same period.

Future cryptocurrency stream

Of course, there’s unlikely to be a one-to-one correlation between Bitcoin and the Argo share price. At the end of December, Argo held 2,595 Bitcoin or Bitcoin Equivalent. That’s worth approximately £72.4m at today’s price, while the company’s market cap stands at £337m. The stock’s valuation is clearly based on Argo’s likely future mining stream, and possibly other opportunities, in addition to its current crypto holdings.

An update on one of those opportunities on 19 January might have given the Argo Blockchain share price a minor boost. At least, the shares gained 7% the next day. It was all about Argo Labs, which the company describes as its “in-house innovation arm established to identify opportunities within the disruptive and innovative sectors of the cryptocurrency ecosystem while supporting the decentralization of various blockchain protocols“.

It seems “Argo has allocated approximately 10% of the Company’s crypto assets in its ‘HODL’ to Argo Labs“. The downward trend did continue immediately afterwards, mind.

Short-seller allegations

I have not yet touched upon a major contributor to the ARB share price downfall. Short-seller Boatman Capital has issued a number of worrying claims, critical of various aspects of how the company is run. In a 6 December report, Boatman suggested “avoiding a company that appears to have displayed serious governance failures and has significantly diluted investor shareholdings over the past year“.

Boatman reckons Argo’s purchase of land in Texas for its new crypto mining facility, worth up to $17.5m, was “about 100x more than the value of the land“. The same report made claims of Argo taking on expensive new debt, while having $5m in cash stashed away.

Argo Blockchain share price pressure

The effect of Boatman Capital’s allegations will surely be helping hold back the Argo Blockchain share price as we progress into 2022. Then again, we often see short-seller criticism of companies come to nought in the long run. So where will the Argo share price go over the course of the year? That will surely depend on the Bitcoin price. And on any further fallout from Boatman’s claims.

I do think there is potential in buying a crypto miner, especially one whose share price has crashed so hard. And I have been looking at ARB over the past couple of months thinking “Should I?” But the uncertainty and risk are still too much for me.

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I am on the lookout for the best UK shares to help make me a passive income from dividend payments. One stock I am considering for my holdings is National Grid (LSE:NG).

Power supplier

As a quick reminder, National Grid is the primary electricity system operator for the UK. Its remit includes ensuring homes and businesses across the UK have the power they need at all times. It also has an operation in the US where it provides similar services to 20m customers in Massachusetts, New York, and Rhode Island.

As I write, National Grid shares are trading for 1,080p. At this time last year, the shares were trading for 851p, which is a 26% return over a 12-month period.

Risks involved

I must note risks involved with National Grid shares. Firstly, dividend payments are not guaranteed and can be cancelled at any time due to market issues or poor performance.

Next, current rising energy prices in the UK could severely hamper investor sentiment. This would affect National Grid and other utilities stocks as well. Finally, regulation in the energy sector is very tight and can often change, which can lead to performance and returns being affected. In fact, National Grid recently challenged new regulation that could have an effect on shareholder returns. 

A passive income UK share I’d buy

National Grid sports an enticing dividend yield of 5%. This is higher than the FTSE 100 average yield of 3%-4%. At current levels, the shares are trading at a fair price, in my opinion, with a price-to-earnings ratio of 27. In addition to its dividend yield, I can see that National Grid has increased its dividend payment for the past 22 years and the yield has never fallen below 3.5%.

National Grid’s performance, which leads to investor returns, has been consistent over the years. I do understand that dividend record and past performance are not a guarantee of the future, however. In it’s most recent half-year report, announced in November, it reported a pre-tax profit of £1.08bn due to increased performance. This is up 86% compared to the same period last year.

Finally, National Grid’s essential position in the UK’s infrastructure, as well as its overseas operations, give me confidence that performance should continue to grow in the years ahead. This will help shareholder returns to continue flowing and help me make a passive income. Furthermore, National Grid acquires businesses that can boost its offering and performance. An example of this is its acquisition of WPD, an electricity distribution business that boosted its half-year balance report recently.

Overall, I think National Grid is an excellent UK share with a good record of performance and dividend records. I believe its position in the infrastructure of the UK and potential for growth will boost performance. This in turn, will help make me a passive income for my holdings. I would add the shares to my holdings at current levels.

Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The transition to green energy seems to me to be inevitable. This provides investment opportunities in the businesses that will facilitate change and ultimately profit from it. I think that Berkshire Hathaway (NYSE: BRK.B) shares offer an attractive way for me to invest into the renewable energy movement.

Berkshire Hathaway is a conglomerate with various revenue sources. One of these is its electric utility subsidiary Berkshire Hathaway Energy (BHE). It is easy to overlook Berkshire Hathaway as an opportunity to invest in renewable energy. BHE only contributes around 9% of Berkshire Hathaway’s revenues and renewable sources only account for just under half of BHE’s total energy generation. I think, however, that BHE’s position within Berkshire Hathaway gives it a big advantage over other electric utilities. I also think that it mitigates some of the major risk that I associate with investing in the shift to renewable energy.

A competitive advantage

In the 2020 letter to shareholders, Warren Buffett described a key advantage that BHE has over other electric utilities. Most electric utility companies distribute around 60% of their earnings as dividends to income-seeking shareholders. This means that they cannot use that money to make investments into renewable energy infrastructure. Instead, they need to finance their investments by taking on debt, or issuing stock that dilutes the value of the shares held by existing shareholders.

By contrast, BHE does not pay a dividend. This means that it is able to use the income that it generates to make investments into renewable energy projects without taking on debt or issuing shares to finance these. Other electric utilities have a much more limited ability to do this. I view the ability to retain earnings and reinvest them into renewable energy projects as a significant advantage that BHE has over other renewable energy investments.

The ability to retain its earnings has allowed BHE to make substantial renewable energy investments. It has invested over $35bn into various renewable energy generation projects. This has reduced BHE’s dependence on coal-fired power plants. In 2006, coal-fired energy generation accounted for 74% of BHE’s overall energy generation. By the end of 2020, this had reduced to 33%. It has also allowed BHE to invest $18bn into the transmission infrastructure required for the transition to renewable energy.

Mitigating risk

The biggest risk that I can see with investing in green energy companies is over-optimism. While the shift to renewable energy seems to me to be inevitable, it is important that companies are disciplined in their investments in this space. Making investments that ultimately fail to pay off can be expensive and even lead to bankruptcy. A prominent example of this comes from SunEdison in 2016.

I think, however, that BHE’s position within Berkshire Hathaway protects it from this risk. There are two reasons for this. First is the ability to invest in renewable energy using its own money, rather than by taking on debt. Second is its position within the wider conglomerate, which connects BHE to $150bn in cash. Also, as part of Berkshire Hathaway, its investments are overseen by Warren Buffett. I can think of nobody better when it comes to finding good value investments. 

All of this means that I think having Berkshire Hathaway shares in my portfolio is an attractive way to invest in the renewable energy movement.

Stephen Wright owns Berkshire Hathaway (Class B) shares. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Thursday was yet another tough day for US tech stocks in 2022. Several companies’ stocks crashed after disappointing investors accustomed to heroic growth during the Covid-19 pandemic. As a result, the tech-heavy Nasdaq Composite index fell by 538.73 points to close at 13,878.82, sliding more than 3.7%. One share to suffer in this tech slump was Amazon (NASDAQ: AMZN) stock, which fell by $235.34 to close at $2,776.91, diving more than 7.8% since Wednesday. However, after the US stock market closed on Thursday, the retail behemoth released its fourth-quarter results. And pre-market futures suggest that Amazon stock is set to soar at Friday’s market open!

Amazon’s sales soar by 22%

In 2021, Amazon’s net sales leapt by 22% to $469.8bn, versus $386.1bn in 2020. Excluding favourable foreign-exchange rates, net sales increased by 21% year on year. Operating income hit $24.9bn, versus $22.9bn in 2020, rising 8.7%. Meanwhile, net income exploded to $33.4bn ($64.81 per share), a mighty 56.8% ahead of 2020’s $21.3bn ($41.83 per share). However, Amazon missed several of its financial estimates for 2021 and also saw a 30% fall in operating cash flow to $46.3bn, versus $66.1bn in 2020. Yet Amazon stock is set to leap when New York opens this afternoon.

Amazon Prime to cost $20 more

Amazon also warned investors that “rising wage and transportation costs” have forced the group to raise the price of its popular Prime subscription service. In the US, Prime membership will increase from $12.99 to $14.99 a month, with annual membership rising $20 to $139 from $119. For new members, the price increase takes effect on 18 February. For existing members, the price hike happens on the date of their next renewal after 25 March. This is the first time Amazon has raised the price of Prime since 2018 and the third increase since Prime’s introduction in 2005. Although the market welcomed this news by bumping up Amazon stock, some Prime subscribers will cancel memberships in response to this price hike. But with 150m US Prime subscribers, Amazon can easily swallow these cancellations.

Amazon stock set to surge on Friday

In after-market trading, Amazon stock surged as much as 18%. As I write, stock futures suggest Amazon shares will open 11.6% ahead of Thursday’s close. With Amazon already worth more than $1.4trn, this will add around $164 to Amazon’s market value. What a comeback from Thursday’s slide.

Then again, Amazon’s net income in Q4/21 was boosted by a pre-tax valuation gain of $11.8bn from its stock investment in electric Rivian Automotive. Since Rivian floated in November, its market value has collapsed from a peak of over $160bn to $54.3bn today. With Rivian stock crashing by 41.8% since 31 December, this will produce a hefty write-down in Amazon’s next set of results. However, investors looked past this setback and welcomed surging revenues at two Amazon powerhouses: Amazon Web Services (AWS) and Ads. Cloud-computing service AWS reported 40% annual revenue growth and generated more than 100% of Amazon’s net income. At Ads, revenue leapt by 32% to $9.72bn for 2021. Even so, Amazon forecast sales of $112bn to $117bn in Q1/22, versus analysts’ expectations of over $120bn.

In summary, despite a predicted sales slowdown and rapidly rising costs, investors have yet to lose faith in the e-commerce Goliath. Let’s see what happens to Amazon stock when the market opens on Friday…

Cliffdarcy has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

As 2021 went on, I increasingly warned that multiple market bubbles might trigger a stock market crash. In particular, I cautioned that highly rated tech stocks were priced for perfection and could fall steeply. Sure enough, many tech stocks got hammered in late 2021 and early 2022 after failing to live up to investors’ expectations. Here are three popular stocks that got punished when their results failed to make the grade.

Tech stock #1: Meta/Facebook

The first of my tech stocks to get wrecked is Meta (NASDAQ:FB), the parent company of social-media giant Facebook. Meta also owns popular services Instagram, WhatsApp and Messenger. After the US market closed Wednesday night with Meta stock at $323, the company released its latest quarterly results. Oh boy, did Mr Market not like Meta’s message. At Thursday’s low, the stock had plunged to $235.74. This fall of $87.26 a share wiped more than a quarter (-27%) from Meta’s stock price, reducing its market value from $900bn to $659bn. This $241bn collapse might well be the worst one-day loss of company value in US history. On Thursday, Meta stock closed at $237.76, down 26.4%. But what caused the collapse? First, a quarterly fall in daily active Facebook users. Second, warnings of increased competition from fast-growing rivals such as video-based social network TikTok. Ouch.

Tech flop #2: Spotify

On Wednesday, audio-streaming service Spotify (NYSE: SPOT) also released disappointing quarterly numbers. Launched in 2008, Spotify has 406m users — including 180m Spotify Premium paid subscribers — across 184 markets. The world’s most popular streaming subscription service offers access to over 82 million tracks, including more than 3.6 million podcast titles. Alas, like Meta, Spotify warned that its subscriber growth would slow in the first quarter of 2022. Despite total revenue growing 24% year on year to almost $2.7bn in Q4/21, this tech stock also got smashed. Spotify shares closed at $191.92 on Wednesday and hit a 52-week low of $155.57 on Thursday. That’s a fall of almost a fifth (-18.9%), losing over $8bn of market value. On Thursday, SPOT closed at $159.76, down 16.8%. Again, this is another example of highly rated, high-profile tech stocks getting beaten down when growth slows or fails to match future expectations.

Tech wreck #3: Paypal

The third of my trashed tech stocks is Paypal (NASDAQ: PYPL), which also missed financial expectations on Tuesday. Again, after warning of weaker growth, Paypal’s stock took a pummelling. Three months ago, PayPal forecast 18% revenue growth in the 2022 financial year. That forecast has since been reduced to 15% to 17%. It now expects earnings per share of $2.97 to $3.15 in 2022, versus $3.52 in 2021. With the payments service apparently going ex-growth, its shares plunged on Wednesday. After closing at $175.80 on Tuesday, Paypal stock hit a low of $129.01 on Wednesday, before recovering to close at $132.57. That’s a crash of almost a quarter (-24.6%), wiping over $50bn from the group’s value. On Thursday, the stock opened lower still, bottoming out at $123.85 before closing at $124.30, down another 6.2%. Paypal also closed 4.5m accounts for abusing opening incentive payments, reducing its customer base to 426m.

Of course, each of these price slides could well be a blip after heroic performances from tech stocks since 2019. And all three companies have outstanding global brands. Who can say? Personally, I have already reduced my family portfolio’s exposure to highly rated US tech stocks. Instead, we’re buying cheap UK stocks on lowly ratings that pay high cash dividends!

Cliffdarcy has no position in any of the shares mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended PayPal Holdings and Spotify Technology. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

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