It's hard to believe, but the first quarter of 2025 is rapidly coming to a close. After doing a quick portfolio checkup, I found that I have stocks that have gained as much as 40% already this year, but I also have a few that are down nearly 30%.
This is an expected part of investing, especially when it comes to growth stocks. In some cases, beaten-down stocks create an excellent buying opportunity, but that isn't always the case. With that in mind, here's a rundown of the three worst-performing stocks in my portfolio so far this year, why each of them has performed so poorly, and which one I think is the best buying opportunity of the three right now.
This pharmaceutical stock has been under pressure
Teva Pharmaceutical (TEVA 1.99%) is my worst-performing stock so far in 2025, down 27% in less than three months as of this writing. And the big reason is the company's fourth quarter earnings report, which sent the stock down by double digits in a single day.
NYSE: TEVA
Key Data Points
For the most part, the earnings numbers themselves were fine. In fact, the company slightly beat expectations for both revenue and earnings. On the other hand, its 2025 guidance for $2.65 per share in earnings was significantly lower than expected, and one of the most surefire ways to make a stock go lower is with disappointing guidance.
There are some big question marks looking ahead. Teva referred to the 2023-2024 period as "return to growth," which it did, but refers to 2025-2027 as the "accelerate growth" period. It expects to do this by maintaining and optimizing its focus on generics, expanding margins, and through innovative launches. With the stock trading for just 6.3 times forward earnings estimates, Teva could have a lot more upside ahead of it if management can deliver on its goals. slide 35
Disappointing results concern investors
In a close second place, Block (XYZ -1.70%) is down by 26% so far this year, and like Teva, the biggest reason was its earnings report.
However, it isn't just guidance that made investors worry. The company missed expectations on both the top and bottom lines and posted year-over-year revenue growth of less than 5%. Increased competition from other payment processors, especially industry-specific players like Toast (TOST -1.16%), which have far more targeted capabilities, is also worrying investors.
Looking ahead, Block is emphasizing its lending capabilities. It acquired buy-now-pay-later company Afterpay in 2021, and just recently rolled out Afterpay on the massively successful Cash App card. Just recently, Square Financial Services received FDIC approval to offer a consumer loan product as well, called Cash App Borrow. Elsewhere in the business, the company is creating an open bitcoin mining system called Proto, which could start contributing to growth later this year.
An ambitious strategy, but the market isn't convinced
Nextdoor (KIND -2.24%) is also in the relatively early stages of monetizing its users. Its average revenue per U.S. daily active user is roughly one-eighth of social media rival Pinterest (PINS -1.56%), to name one example.
After a quick glance at the company's earnings, you might wonder why the stock is down 26% this year. In the fourth quarter, revenue grew 17% year-over-year and the company produced positive adjusted EBITDA for the first time as a public company. Nextdoor finished the year with $427 million in cash and equivalents and no debt whatsoever, and this is just a $676 million market cap company. It is buying back stock at a rather aggressive pace, which makes sense considering the improving profitability and large net cash position.
In simple terms, shareholders don't seem convinced when it comes to founder and CEO Nirav Tolia's vison to reinvent the platform as NEXT, which the company calls "a reimagined and significantly improved version of Nextdoor." It will contain more local-focused content, real-time local alerts, and an AI-powered local recommendations hub, among other things. Plus, the company's forecast for flat revenue and a sizable adjusted EBITDA loss in the first quarter likely isn't what investors wanted to see.
Which one is the best opportunity now?
I think all three of these stocks are still solid opportunities. I own all three in my portfolio, although Nextdoor is a much smaller position than the other two, and I don't plan on selling a single share of any of them.
While Teva has a ton of long-term potential and trades for an extremely cheap valuation, and Nextdoor could be a home run if its leaders can execute on their vision, Block is the company I've added shares to in 2025. In short, there is still a massive opportunity to scale both sides of its ecosystem, and the momentum heading into 2025 looks impressive in several ways.
