Growth boosts valuation multiples, but it doesn’t always last forever. Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
The risks that can come from buying these assets are precisely why we started StockStory — to isolate the long-term winners from the losers so you can invest with confidence. That said, here are three growth stocks whose momentum may slow and some other opportunities you should look into instead.
Lucid (LCID)
One-Year Revenue Growth: +66.5%
Founded by a former Tesla Vice President, Lucid Group (NASDAQ:LCID) designs, manufactures, and sells luxury electric vehicles with long-range capabilities.
Why Does LCID Give Us Pause?
- Negative 135% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Cash-burning history makes us doubt the long-term viability of its business model
- Depletion of cash reserves could lead to a fundraising event that triggers shareholder dilution
Lucid is trading at $4.07 per share, or 0.7x forward price-to-sales. Check out our free in-depth research report to learn more about why LCID doesn’t pass our bar.
EVgo (EVGO)
One-Year Revenue Growth: +30.7%
Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ:EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.
Why Are We Wary of EVGO?
- Poor expense management has led to operating margin losses
- Cash-burning tendencies make us wonder if it can sustainably generate shareholder value
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
EVgo’s stock price of $1.37 implies a valuation ratio of 0.4x forward price-to-sales. Dive into our free research report to see why there are better opportunities than EVGO.
Lemonade (LMND)
One-Year Revenue Growth: +62.3%
Built on the principle of giving back unused premiums to charitable causes selected by policyholders, Lemonade (NYSE:LMND) is a technology-driven insurance company that offers homeowners, renters, pet, car, and life insurance through an AI-powered digital platform.
Why Are We Hesitant About LMND?
- Annual earnings per share growth of 8% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Products and services are facing significant credit quality challenges during this cycle as book value per share has declined by 18.4% annually over the last five years
- Push for growth has led to negative returns on capital, signaling value destruction
At $45.48 per share, Lemonade trades at 7.3x forward P/B. If you’re considering LMND for your portfolio, see our FREE research report to learn more.
Stocks We Like More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.