Overvalued stocks are securities which trade higher than their ‘fair market price’ or ‘fair market value’. If the stock price is based on the ‘fair market value’, it means that the value of the stock is according to the company’s own earnings or revenue. If a stock or security is overvalued, it means its current value is above the company’s own earnings or revenue. Overvalued stocks offer a good opportunity to investors to make profits off of their sells. It is advisable to sell overvalued stocks.

If you are a stock trader, here are three overvalued stocks to short in 2021.

Top Overvalued Stocks

Tesla Stock (NASDAQ: TSLA)

Tesla (NASDAQ: TSLA) is the leading car and energy maker in the world. Recently, its stock met some recent highs and low. Today, its stock has soared to $675.50.

To realize Tesla as an overvalued stock, it is important to see how much it has risen in value in a year.

As of Dec, 10, 2020, Tesla stock gained almost 600%.

With analysts predicting Tesla’s earnings to stall through 2024, Tesla stock might be overvalued on a speculative basis. Further developments may increase Tesla stock in value, which would charge its price further. Let’s not also forget that Tesla stock even hit almost $800 last year.

Tesla stock may meet a lot of volatility and if you are holding on to Tesla stock, it may be worthwhile to sell it and pick up stocks that are more contemporary and cheaper, with which you can diversify your portfolio as well.

Tesla stock, which can also be categorized under ‘tech stocks’, is one of the overvalued stocks to short this year.

Zoom (NASDAQ: ZM)

Zoom (NASDAQ: ZM) has gained a lot of popularity in the last one and a half year because of the corona pandemic. However, if you want to sell an overvalued stock or buy and then sell one, you might want to explore Zoom (NASDAQ: ZM).

If we are looking at ‘are tech stocks overvalued’ and looking at Zoom in particular, we can say yes because its stock shot up by 379% in 2020. However, this overvaluation can be associated with the corona pandemic and a big rise in ‘apps that help us connect’. 2021 has been strong for the company as well. The company’s shares are higher by 26% this year.  However, with improvement in the corona pandemic due to the Covid-19 vaccines and when things start to open, Zoom stocks could meet an inevitable decline.

While investors like Zoom, it is a real outlier if we are talking about overvalued stocks. ZM is overweight and in the coming future, when vaccines are dispersed widely, it would reduce the demand for Zoom and its solutions. It is, therefore, better to sell Zoom stocks to make better gains off of it today.

Apple (AAPL)

Apple (AAPL) is a name we are not aloof to. The company’s shares have risen by about 70% since last year. Investors believe in the company and its equity alike. However, if we are talking about overvalued stocks, we must think of Apple.

AAPL stock is always in the limelight because the company always has a series of products to offer every year. However, AAPL stock is still overvalued by many metrics. AAPL may offer consistency in your investor basket but not the choice to diversify. Its stock is pricey and offers limited scope than other main stream stocks.

AAPL is priced at $121.26 after falling off late. It is, therefore, better to short it and pick up stocks that are cheaper, those that will be in higher demand this year such as pharmaceutics and those that help you diversify.

If you are an investor looking at ‘Three Overvalued Stocks To Short In 2021’, these three may be great considerations.