Given the rising concerns over the Delta variant’s impact on the economic recovery, many investors expect the stock market to remain under pressure in the near term. Amid this environment, Zoom Video Communications (NASDAQ:ZM) and Fastly Inc . (NYSE:FSLY) seem extremely risky bets now, given their weak earnings and sky-high valuations.This week, all three major indices are headed for losses as investors remain concerned over the Delta variant's effect on economic recovery. Adding to the worries is the possibility that the Fed will tighten its accommodative policy, which has kept the rates low and aided the economic recovery.
If money doesn’t remain cheap, the stock market could witness significant pressure. Particularly, stocks that are overvalued and possess weak growth attributes could see a massive pullback.
Given considerable uncertainty related to the market’s momentum in the upcoming weeks as investors are eyeing the forthcoming Fed meeting, we believe fundamentally weak stocks Zoom Video Communications Inc. (ZM) and Fastly Inc. (FSLY) are best avoided now. These two stocks have delivered weak earnings, and their sky-high valuations do not match their bleak financials.