A company called Benzinga wrote an article about four tech stocks that might lose a lot of value soon. These stocks are Box, Cheetah Mobile, and two others that are not mentioned here. The article says we can use a tool called RSI to see how strong these stocks are compared to their price. When the RSI is above 70, it means the stock might go down soon. Read from source...
- The author starts with a vague and misleading title that implies a strong probability of the four stocks imploding soon, without providing any evidence or reasoning to support such a claim.
- The author uses the RSI indicator as a sole criteria to select overbought stocks, without explaining how this measure reflects the underlying fundamentals, earnings, growth potential, or competitive advantages of each company.
- The author does not provide any historical context or comparison for the RSI values of these stocks, nor does he mention how they have performed in the past or how they are expected to perform in the future based on analyst forecasts, technical analysis, or other sources of information.
- The author fails to disclose his affiliation with Benzinga, a financial media company that may benefit from generating traffic and attention for its own services and products, such as Benzinga Pro, which offers advanced trading tools and data to investors. This creates a potential conflict of interest and bias in the presentation of information.
- The author does not cite any sources or references for his claims, statistics, or opinions, making it hard for readers to verify or challenge his arguments.
- The author uses emotional language and exaggeration to persuade readers, such as "warning", "flashing", "real", and "momentum". He also appeals to fear and greed by implying that investors who do not heed his advice may lose money or miss out on opportunities.
- The author does not provide any constructive or actionable recommendations for readers, such as what to buy, sell, hold, or avoid, based on his analysis. He only lists the stocks and their RSI values, without explaining how he would trade them or why they are good or bad investments.
- Box (NYSE:BOX) is a cloud content management and collaboration platform that provides secure storage, sharing, and access to files from any device. It has a strong customer base of over 90,000 organizations, including 69% of the Fortune 500. However, it faces intense competition from rivals like Dropbox, Google Drive, and Microsoft OneDrive, as well as from internal IT departments that may prefer on-premise solutions. Additionally, Box's revenue growth has been slowing down significantly in recent quarters, from 31% in Q4 2020 to 19% in Q3 2021, and its net income margin has been negative for the past five years. Therefore, I would not recommend investing in Box at its current price of $25.68 per share, as it is overvalued and risky. The potential downside could be around -40% or more, if the stock continues to decline towards its support level of $15.73, which is also the lower boundary of a descending channel that has been in place since February 2021. A break below this level would indicate further weakness and possibly a reversal to the previous low of $8.96, which is about -64% lower than the current price.
- Cheetah Mobile (NYSE:CMCM) is a Chinese company that provides mobile internet services, such as utility apps, content delivery network, and online advertising solutions. It has a large user base of over 570 million monthly active users, but it faces regulatory hurdles in China, as well as fierce competition from other tech giants like Tencent, Alibaba, and Baidu. Moreover, its revenue growth has been stagnating for the past few years, ranging between 1% and 8%, while its net income margin has been negative or minimal for the same period. Therefore, I would not recommend investing in Cheetah Mobile at its current price of $3.50 per share, as it is undervalued and risky. The potential downside could be around -20% or more, if the stock continues to decline towards its support level of $2.84, which is also the lower boundary of a consolidation range that has been in place since June 2021. A break below this level would indicate further weakness and possibly a reversal to the previous low of $1.95, which is about -41% lower than the current price.