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Since Facebook formally changed its name to Meta (NASDAQ:META), the Metaverse has been a siren song for investors and companies alike. Billions of dollars have been dashed upon the rocks chasing metaverse profit that often failed to materialize. In such times, wise investors need to cut their losses and sell the metaverse stocks that fail to deliver.

The metaverse was promised to completely upend social lives and mores. People would interact in an online virtual or augmented reality in a way that some claimed would be indistinguishable from actual reality. And in that new reality, entire businesses and economies would spring up to service our every virtual need.

That promise held a certain allure to those of us with a science-fiction bent, but it hasn’t really come to pass. The metaverse as a replacement for real life is just as far as it was a few years ago. And augmented and virtual reality remain niche products. Because of that, the companies poised to profit off the metaverse have mostly fallen hard.

While some companies that invested in the metaverse remain strong, several underperforming metaverse stocks are still out there. These stocks may have a beautiful vision and a smart idea, but that alone won’t make a successful business. Companies that continue to invest heavily in the metaverse with little to show for it aren’t likely to rebound quickly to their all-time highs.

While some still see the metaverse as the future of work, the internet, and even life in general, it’s important to keep a clearer head when investing. So here are three of the top metaverse stocks to sell.

Roblox (RBLX)

Roblox (NYSE:RBLX) is not only a games platform, it’s also a development environment. It allows anyone to make, share and play their own games or anyone else’s. And games aren’t all; an entire ecosystem of sharable online content has grown out of Roblox. It’s no wonder Roblox has garnered a user base of over 250 million monthly average users. And when the metaverse was hot, Roblox was a top metaverse stock. Its platform was seen as ideal because the metaverse needs content, and Roblox is a content-creating machine.

But by the numbers, Roblox doesn’t seem worth its current market cap. Their Q1 2023 earnings showed them with just $828 million in cash and cash equivalents. With a net loss of $290 million, that gives them just three quarters of cash runway.

Roblox boosters will point out that they also have $1.4 billion in short-term investments, which can increase that runway. But earnings are also going in the wrong direction. From Q1 2022 to Q1 2023, while revenue increased by $118 million, expenses increased almost as fast. Their net loss went from $162 million to $270 million.

Roblox is moving quickly in the wrong direction. Revenue growth is far outpaced by expenses growth. And that revenue growth, while impressive, hardly justifies their current valuation. In the near term, this makes Roblox one of the metaverse stocks to sell.

Snap (SNAP)

Snap (NYSE:SNAP) is the social media company behind Snapchat, Bitmoji, and other augmented reality apps. While their CEO Evan Spiegel may not have agreed with Meta’s vision of the metaverse, the company has still bet big on delivering AR to customers everywhere.

Snap stock skyrocketed during the COVID-19 pandemic as people stuck inside turned to AR to fill the void in their social lives. As the pandemic faded, Snap stock has taken a big hit, partly driven by lower ad revenue and a continued lack of profits. With their Q1 2023 earnings showing an operating loss of $365 million on revenue of $989 million, Snap is moving swiftly in the wrong direction.

For its part, Snap has highlighted continued growth in daily average users (DAUs). And they continue to improve their AR offerings, with Spectacles and AR mirrors to let customers see what they want to see. But if Snap is getting worse at turning users into revenue, as their earnings seem to show, those offerings may not move the needle.

The bottom line is that Snap looked like a sure bet when the pandemic made us lonely and bored. They seemed poised to lead an AR revolution to upend how we interact socially. Now that the pandemic is over, we’re realizing that we’ve mostly returned to how things used to be. And that’s not good news for a company trying to sell a revolution.

Coinbase (COIN)

The cryptocurrency was supposed to be the currency of the metaverse, but it’s still struggling to be a currency of any kind. That puts Coinbase (NASDAQ:COIN) in a bind. This premier crypto trading platform loses money despite chasing the metaverse hype.

Coinbase isn’t a bank and isn’t just an exchange. But it’s one of the closest and most trusted versions of both those things that the crypto industry has. Coinbase makes money on trading fees, markups, and services for crypto traders and holders. When cryptocurrency was popular, those fees brought impressive revenue. As crypto’s popularity has waned, that revenue has dried up.

Coinbase’s Q1 2023 earnings demonstrate this point quite starkly. Revenue contracted by 36.8% year-over-year, from $1.16 billion to $0.74 billion. Operating losses also decreased, and Coinbase still isn’t close to making a profit, with a net loss of $79 million for the quarter.

Coinbase isn’t close to bankruptcy yet, as it still has $5 billion in cash and cash equivalents. But Coinbase’s collapse in revenue is unlikely to reverse itself unless another crypto boom happens. At this point, that seems highly unlikely in the near term.

Coinbase thought that cryptocurrencies and NFTs would be the currency and asset class of the metaverse. But that dream hasn’t materialized. And with Coinbase continuing to lose money with ever-shrinking revenue, there’s little left for investors but to make their exits.

On the date of publication, John Blankenhorn held a long position in Meta. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

While there are plenty of bargains to buy among penny stocks, there are also a good amount of overvalued penny stocks to sell. While significantly lower-priced now than they were at their respective high water-marks, many of these stocks are hardly bargains, trading at valuations unsustainable relative to their current operating performance. Rather than having high upside potential, with low downside risk, these names instead have plenty more room to fall relative to current prices. Some of them are even at risk of experiencing a full-on “game over” moment. Taking this into account, if you own any of these seven overvalued penny stocks to sell, consider it high time to make your exit.

Blue Apron (APRN)

Founded in 2012, it took just a few years for Blue Apron (NYSE:APRN) to become a household name. Despite this, the meal kit provider has failed to ever translate this into a profitable business. At the onset of the pandemic, there was speculation that the resulting “stay at home economy” would provide the company with a growth resurgence.

This provided a massive boost for APRN stock in 2020. However, as the pandemic failed to spur growth, with sales flatlining, and Blue Apron’s losses ballooning, shares have given back these gains, and then some since 2021. While APRN is a lot cheaper today, at sub-$1 per share prices, there’s a good reason for this. Even as Blue Apron shifts to an asset-light model, as a Seeking Alpha commentator argued earlier this month, the company needs to severely dilute shareholders in order to raise enough cash to survive.

Clover Health (CLOV)

As you may recall, Clover Health (NASDAQ:CLOV) was one of the more popular secondary meme plays during the “meme stock mania” of 2021. At the time, retail traders bid up CLOV to prices topping $25 per share. Flash forward to now, and CLOV stock is a far cry from its meme stock highs. Today, shares in the Medicare Advantage Plan provider trade for just under one dollar. Despite this low price though, it’s wise to consider it as one of the overvalued penny stocks to sell.

Why? Mostly, because the issues that caused CLOV to crater have not fully gone away. Clover keeps reporting high net losses. Last quarter, net losses came in at $72.6 million. With revenue growth slowing down, it is debatable whether this healthcare firm will attain the scale necessary to become consistently profitable. As poor results persist, shares will likely drift lower.

FuboTV (FUBO)

FuboTV (NYSE:FUBO) is another former retail investor fave that has become one of the top overvalued penny stocks. Back in late 2020, this company excited investors with an interesting business concept. At the time, FuboTV was pitching to the market that it would disrupt both the sports streaming and sports betting industries, by offering both programming and betting on its platform. Unfortunately, while on paper this combo sounded unstoppable, FuboTV failed to disrupt. Instead, competition from both the streaming and betting industries prevented the company’s game plan from working in practice.

The resultant high operating losses and underwhelming revenue growth caused FUBO stock to plunge. Fully abandoning its sports wagering plans, FuboTV is now merely an “also ran” streaming platform, that as InvestorPlace’s Larry Ramer recently argued, faces bleak prospects as it burns through cash and fails to attain the critical mass necessary to become profitable.

MannKind (MNKD)

Unlike the overvalued penny stocks to sell mentioned above, MannKind (NASDAQ:MNKD) has not only been a publicly-traded company for far longer. Shares in this biotech firm, whose offerings include inhaled insulin product Afrezza, have been in or slightly above “penny stock territory” for most of the past decade.

InvestorPlace’s Ian Bezek isn’t confident that MNKD stock will make a permanent breakout from such low price levels. Earlier this month, he argued that the company is overvalued. Mostly, because MannKind’s flagship product Afreeza has failed to gain traction, and the company remains unprofitable.

Sure, analyst forecasts somewhat counter Bezek’s argument. The sell-side believes MNKD could achieve annual earnings of 35 cents per share in 2025. Still, take a look at other commentary about the company, and you’ll see it has a history of over-promising and under-delivering. It may be wise to take analyst forecasts with a grain of salt.

Mullen Automotive (MULN)

You don’t have to dig deep to see why Mullen Automotive (NASDAQ:MULN) is one of the top penny stocks to avoid. Plenty of investors have been burned after dabbling in shares in this early-stage electric vehicle (or EV) company.

High losses and heavy use of dilutive financing methods have led to extreme shareholder value destruction with MULN stock. Adjusting for stock splits, MULN stock has gone from prices over $400 per share in 2021, to less than $1 per share today.

If that’s not bad enough, all signs point to more shareholder value destruction ahead. As I argued earlier this month, Mullen needs to severely dilute shareholders once again, in order to both stay afloat, as well as to finance its EV production ramp-up. If the company raises these funds, and again ends up with little to show for it, MULN stock could experience another sharp plunge.

Rite Aid (RAD)

Pharmacy chain Rite Aid (NYSE:RAD) has long since been in a slump. Chalk this up to poor operating results and high levels of debt. However, the situation has rapidly worsened over the past year.This has caused RAD stock to tumble by two-thirds over the past year. Yet despite its current sub-$2 per share valuation, don’t assume the stock has become oversold. Instead, RAD appears to be one of the overvalued stocks to sell, mainly due to the high bankruptcy risk.

As a Bloomberg article detailed back in April, alongside upcoming debt maturities in 2025 and 2026, Rite Aid is also contending with opioid-related litigation. Barring an unforeseen recovery in Rite Aid’s operating performance, RAD shareholders are likely to either experience further high losses (from dilution stemming from capital infusions) or a total loss (if the company’s debt and legal liabilities throw it into Chapter 11).

Exela Technologies (XELA)

As I put it back in March, “even under a nickel, Exela Technologies (NASDAQ:XELA) isn’t worth a penny.” Admittedly, this quip is somewhat out of date. Following a 1-for-200 reverse stock split completed on May 12, the outsourcing firm’s shares no longer trade for literal pennies.

That said, the spirit of my argument still stands. The underlying fundamentals of XELA stock have not changed. Inflation has squeezed margins, and the company is scrambling to cut costs in order to get out of the red. At the same time, Exela’s balance sheet is saddled with around $1.1 billion in debt. Even with reported operational improvements, there’s a good chance this debt vastly exceeds the underlying value of the business. XELA may not go to zero, but if negotiations with some of its lenders lead to a recapitalization, dilution from a debt-for-equity swap could send shares to significantly lower prices.

On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.