The Worst-Performing Stocks Of 2023

There's little question 2023 was a banner year for the U.S. stock market. While the S&P 500 index rose by more than 24%, the tech-heavy Nasdaq soared an eye-popping 43%. Yet, in spite of that, not every single company shared in the cheer; specifically, a full 178 individual stocks within the 500 companies that comprise the S&P index had negative returns for 2023, some worse than others.

A large driver behind the stock market's rally in the final few months of 2023 was the anticipation that the Federal Reserve would soon begin lowering interest rates. Throughout much of 2022 and 2023, the Fed was forced to raise interest rates to combat runaway inflation resulting from supply chain issues and excessive financial stimulus during the COVID-19 pandemic.

While inflation is indeed finally slowing, the higher interest rates had a side-effect of increasing borrowing costs for businesses. That, combined with other challenges such as reduced demand for products contributed to the fate of the five worst-performing stocks of 2023, at least among those monitored by research mogul Morningstar.

Headquartered in Campbell, California, ChargePoint (NYSE: CHPT) bills itself as "... the world's largest network of electric vehicle (EV) charging stations in North America and Europe." Consumers have recently started to push back on the electric-car revolution, casting doubts on whether the time frame for eliminating internal combustion engine-powered vehicles might be overly aggressive. But prior to the latest headwinds, the EV sector was a promising one for many investors. Contrary to that trend, however, ChargePoint has been losing value since its peak of $46.10 per share on December 24, 2020. Compare that to December 29, 2023 — the last trading day of 2023 — where CHPT was trading for a mere $2.34 per share.

In 2023 alone, ChargePoint stock plummeted 75.45%, giving it the dubious distinction of being the worst-performing U.S. stock of 2023 among the many monitored by the research and investment firm Morningstar. In particular, Morningstar acknowledges that while the California company is dominant in the conventional alternating current Level 2 charging space, it has less competitive advantages in the burgeoning DC (or direct current) ecosystem, which offers faster charging times to EV drivers.

Additionally, the company raised $232 million in funding during 2023 by selling additional stock, which watered down the value of existing shares. Finally, ChargePoint's CEO and CFO were both replaced in November 2023, adding to investor uncertainty.

The next company on a list that nobody wants to find themselves is SunPower (NASDAQ: SPWR), which plunged 73.21% over the course of 2023. Like the name implies, SunPower is a company that specializes in residential solar panels and clean energy storage. Echoing a similar situation as electric vehicles are experiencing, the once-buzzworthy residential solar market is slumping, with reduced demand from consumers. According to the Solar Energy Industries Association, U.S. residential solar installations are expected to fall 12% in 2024, owing to higher interest rates and stabilizing energy prices.

An additional headwind to solar companies in general is a recent change in "net metering" credits, which occurs when homeowners with solar energy panels sell excess electricity back to local utility companies. Of late, net-metering policies have become less generous, especially in California, where the value of credits decreased by approximately 75% in 2023, making solar panels a less attractive proposition for homeowners. To close 2023, SunPower faced concerns of default and whether it could continue operating, which further hammered its share price on the market.

Founded in 2006, the appropriately named SolarEdge Technologies (NASDAQ: SEDG) is another participant in the green energy sector. In particular, its DC-optimized voltage inverters are a popular choice for converting energy from solar panels into usable electricity for both homes and businesses. Besides this traditional role, modern inverters can also store solar energy for use after dark and/or during power outages.

Unfortunately, many of the challenges, such as reduced demand for solar energy, facing solar panel providers like SunPower are applicable to SolarEdge's business model as well. As such, its stock fell nearly 67% over the course of 2023. A recent expansion into servicing the utilities-scale market (as in, utility companies) in addition to homes and businesses seems like a positive development, but in the opinion of some analysts, the new supply of customers isn't as lucrative as smaller scale buyers. "Average selling prices and gross margins typically deteriorate as project sizes increase," according to Morningstar.

From the five worst-performing stocks of 2023, Lumen Technologies (NYSE: LUMN) is the only business not operating in the green energy sector. Instead, the Louisiana-based telecommunications company provides network services and technologies based on fiber optics. In late 2022, Lumen hired a former Microsoft executive, Kate Johnson, as CEO to turn the company's fortunes around. Since then, the company has reported acquiring 2,500 new customers and a 16% increase in sales among existing customers, as reported by The Motley Fool. Additionally, Lumen recently launched an internet on-demand program in select markets, which allows its customers to pay for only the bandwidth they use, as opposed to conventional subscription-based fees.

Still, Lumen Technologies' future isn't all rosy. The company has a tremendous amount of debt of more than $8 billion, per The Wall Street Journal. Johnson was able to negotiate additional time to pay off that debt, which is a good thing, but at the expense of higher interest rates. Morningstar notes that "the company faces overcapacity, multiple competitors, and technological advances that lead to deflationary pricing and cannibalization of big legacy revenue streams." During 2023, shares of Lumen Technologies shed 64.94% of their value.

Yes, Plug Power (NASDAQ: PLUG) is another green energy play, but unlike others we've discussed, it takes the novel approach of using hydrogen to replace batteries in fuel cells. Plug Power supplies hydrogen-powered fuel cell equipment like forklifts to major businesses, like Walmart and Amazon, along with replacement fuel cells for this equipment. The year 2023 was a grim one for this innovator in the hydrogen space, with its company shares dropping more than 63% and a continued plunge of approximately 20% so far in 2024 year-to-date.

The Motley Fool recently commented that Plug Power may have been unfairly lumped in with other green energy stocks facing slowing sales in the residential market, given that Plug Power's clients are mostly commercial. That said, Plug Power management has hinted at a serious cash flow problem — one serious enough the company may cease to be a going concern unless additional funds are raised soon. That capital could likely come from issuing new shares of Plug Power stock, which will dilute the value of existing shares — a common thread among companies on the list of worst-performing stocks.