In this article, we discuss the 10 Reddit stocks that are getting crushed.
Retail traders were the headliners of 2021 in the finance world. In 2022, these traders, although still very active at the stock market, have not been in the news much as inflation batters the market and value plays steal the spotlight from growth firms. However, one particular retail trader, Jaime Rogozinski, the founder of the popular WallStreetBets forum on Reddit, recently made waves when he announced the listing approval of the Insider Portfolio, a fund on the MERJ Exchange that tracks the performance of the stocks traded by prominent US Congress members, including House Speaker Nancy Pelosi.
In 2021, retail traders, many of whom frequent the WallStreetBets forum, had engaged in a battle for market dominance with hedge funds, resulting in losses worth billions to the latter. In 2022, this battle could very well come to the US Congress.
Some of the top Reddit stocks that are getting crushed include Robinhood Markets, Inc. (NASDAQ:HOOD), Upstart Holdings, Inc. (NASDAQ:UPST), and Snap Inc. (NYSE:SNAP), among others discussed in detail below.
Our Methodology
These were selected based on the hype around the companies on internet platform Reddit. Stocks that have registered a more than 15% decline in share price over the past few months were preferred for the list.
Reddit Stocks That Are Getting Crushed
10. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders: 57
Decline in Share Price Over Past Six Months: 17.86%
Coinbase Global, Inc. (NASDAQ:COIN) provides financial infrastructure and technology for the crypto universe. Even though the stock has suffered amid a broader lull around growth stocks, it has registered a small rally in the past few weeks on the back of reports that it is in talks to purchase 2TM, the firm that owns the largest crypto exchange in Brazil. The stock has also gained as Bitcoin, the most popular crypto coin, stays on course to climb above $45,000 as investors load up on the coin as a reserve asset in the inflation market.
On March 30, US Tiger analyst Bo Pei initiated coverage of Coinbase Global, Inc. (NASDAQ:COIN) stock with a Sell rating and a price target of $135, highlighting that the revenue of the firm was a “function of crypto market performance and transaction fees” and competition for the firm was “intensifying”.
Among the hedge funds being tracked by Insider Monkey, New York-based firm ARK Investment Management is a leading shareholder in Coinbase Global, Inc. (NASDAQ:COIN) with 5.4 million shares worth more than $1.3 billion.
Just like Robinhood Markets, Inc. (NASDAQ:HOOD), Upstart Holdings, Inc. (NASDAQ:UPST), and Snap Inc. (NYSE:SNAP), Coinbase Global, Inc. (NASDAQ:COIN) is one of the stocks that growth investors are keeping their eye on.
In its Q4 2021 investor letter, Longleaf Partners Fund, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. (NASDAQ:COIN) was one of them. Here is what the fund said:
“We also have seen plenty of IPO/SPAC craziness showing both that private players need public markets more than they admit and that there is more volatility embedded in these newer companies than a private quarterly mark might admit. As for how efficient both the private and public markets are, we would encourage you to really delve into some of those multi-hundred-page S1s for many of the newest public companies to see the huge gap between the last valuation at which the company was funded and/or granted shares to its executives and the often much higher price at which the company went public – Coinbase Global, Inc. (NASDAQ:COIN) is a prime example.”
9. BlackBerry Limited (NYSE:BB)
Number of Hedge Fund Holders: 15
Decline in Share Price Over Past Six Months: 23.09%
BlackBerry Limited (NYSE:BB) provides security software and services. On March 31, the company posted earnings for the fourth quarter of 2021, reporting earnings per share of $0.01, beating estimates by $0.04. The revenue over the period was $185 million, missing estimates by over $1 million. In late January, the company had agreed to sell almost all of its non-core patent assets to Catapult IP Innovations for around $600 million.
On February 22, Canaccord analyst T. Michael Walkley lowered the price target on BlackBerry Limited (NYSE:BB) stock to $7 from $10 but kept a Buy rating, noting that there was a “broader multiple compression for software and cybersecurity stocks” despite a long-term bullish outlook.
Among the hedge funds being tracked by Insider Monkey, Canada-based investment firm Fairfax Financial Holdings is a leading shareholder in BlackBerry Limited (NYSE:BB) with 46 million shares worth more than $436 million.
8. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 24
Decline in Share Price Over Past Six Months: 42.55%
SoFi Technologies, Inc. (NASDAQ:SOFI) provides digital financial services. Since a large part of the business of the firm relies on refinancing student loans, a federal student loan moratorium has had a negative overall effect on the stock. The firm has been introducing new crypto-focused initiatives to offset some of these negatives. It recently launched a new feature that allows users to invest a part of every direct deposit into a cryptocurrency. The feature comes with no extra fees.
On March 16, Morgan Stanley analyst Betsy Graseck downgraded SoFi Technologies, Inc. (NASDAQ:SOFI) stock to Equal Weight from Overweight and reduced the price target to $10 from $18, noting that the student loan moratorium had the potential to bleed into 2023, referring to the student loan business as a “key” catalyst for the firm.
At the end of the fourth quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $826 million in SoFi Technologies, Inc. (NASDAQ:SOFI), compared to 33 in the preceding quarter worth $852 million.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ:SOFI) was one of them. Here is what the fund said:
“During the quarter, the Fund initiated three new positions and exited five positions. Below we discuss some of our top net purchases and sales. We sold our position in SoFi Technologies, Inc. (NASDAQ:SOFI) after a strong run due to concerns about intensifying competition and rising customer acquisition costs for consumer-facing FinTech companies.”
7. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 33
Decline in Share Price Over Past Six Months: 43.57%
Palantir Technologies Inc. (NYSE:PLTR) is a software firm that works with the intelligence community in the United States. One of the biggest bulls of the firm, Cathie Wood of ARK Investment Management, has over the past few weeks dumped a large portion of her stake in the software firm, piling onto the pressure on the shares that had been on a downward trajectory amid a market shift towards value plays. The war in Ukraine, however, has prevented more downside as countries around the globe increase spending on intelligence and defense.
On March 9, Piper Sandler analyst Weston Twigg initiated coverage of Palantir Technologies Inc. (NYSE:PLTR) stock with an Overweight rating and a price target of $15, underlining that the firm was improving “operational effectiveness by combining software, artificial intelligence and data into powerful, central IT solutions”.
At the end of the fourth quarter of 2021, 33 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Palantir Technologies Inc. (NYSE: PLTR), compared to 35 in the preceding quarter worth $1.6 billion.
In its Q4 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Palantir Technologies Inc. (NYSE:PLTR) was one of them. Here is what the fund said:
“We have no new position this quarter and have made below changes to our portfolio. We also sold Palantir Technologies Inc. (NYSE:PLTR) as I identified it subject to high retail bubble risk (using above method) and are not part of our core “Mindful Compounder” holdings.”
6. Boxlight Corporation (NASDAQ:BOXL)
Number of Hedge Fund Holders: 4
Decline in Share Price Over Past Six Months: 45.95%
Boxlight Corporation (NASDAQ:BOXL) is an education technology company. After a prolonged lean period, the shares of the firm have jumped in the past few weeks after it completed the purchase of FrontRow Calypso, another edtech firm, through a $68 million credit agreement with WhiteHawk Finance. Boxlight paid a further $33 million in cash for the deal. The acquisition will add $30 million in sales and $15 million in gross profits to Boxlight financials, per Michael Pope, the CEO of the firm.
On March 10, Alliance Global Partners analyst Brian Kinstlinger kept a Buy rating on Boxlight Corporation (NASDAQ:BOXL) stock but lowered the price target to $4 from $6.5, noting that there was a limited confidence that the global supply chain will improve in 2022 and this created heightened operational risk for Boxlight.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Boxlight Corporation (NASDAQ:BOXL) with 1.5 million shares worth more than $2.1 million.
Along with Robinhood Markets, Inc. (NASDAQ:HOOD), Upstart Holdings, Inc. (NASDAQ:UPST), and Snap Inc. (NYSE:SNAP), Boxlight Corporation (NASDAQ:BOXL) is one of the stocks that retail investors have on their radar.
5. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 55
Decline in Share Price Over Past Six Months: 52.17%
Snap Inc. (NYSE:SNAP) is a California-based camera company. On March 23, the firm announced that it had purchased Paris-based neurotech startup NextMind. The latter has built a non-invasive technology that translates brain signals into digital commands. This discovery has potential since it will allow users to control visual interfaces through this tech in real-time. The purchase is part of a long-term investment plan of Snap that is focusing on next-gen augmented reality research projects.
On March 25, Loop Capital analyst Alan Gould lowered the price target on Snap Inc. (NYSE:SNAP) stock to $65 from $68 but kept a Buy rating, underlining that Snap was the “fastest-growing” public internet company but was monetizing at a much lower rate than competitors.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in Snap Inc. (NYSE:SNAP) with 33 million shares worth more than $1.5 billion.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Snap Inc. (NYSE:SNAP) was one of them. Here is what the fund said:
“Snap Inc. (NYSE:SNAP) is the leading social network among teens and young adults in North America and a growing number of overseas markets, including Western Europe and India. Shares fell this quarter on a greater-thananticipated impact from Apple’s new privacy changes for iOS mobile devices. These changes made it more difficult for Snapchat to measure the effectiveness of ads shown on its platform. We believe this is a near-term, industry-wide issue for which Snap Inc. (NYSE:SNAP) is already developing a solution. Longer term, we continue to view Snap Inc. (NYSE:SNAP) favorably as the company sustains its rapid pace of product innovation and expands its premium partnerships with advertisers.”
4. DraftKings Inc. (NASDAQ:DKNG)
Number of Hedge Fund Holders: 34
Decline in Share Price Over Past Six Months: 61.49%
DraftKings Inc. (NASDAQ:DKNG) is a digital sports entertainment and gaming firm. There have been concerns around revenue deceleration of the firm. To address some of these problems, the company recently announced the first in-house NFTs launch in the company’s marketplace. The NFTs, part of the Primetime NFT Series, will be the 2022 College Hoops Collection and have been slated to launch as the national college basketball tournament begins. Matt Kalish, the president of the firm, said the NFTs will drive engagement and bridge gaming offerings.
On March 17, UBS analyst Robin Farley kept a Neutral rating on DraftKings Inc. (NASDAQ:DKNG) stock and lowered the price target to $18 from $44, underlining that there was a more “subdued” profitability outlook for the firm into 2024.
At the end of the fourth quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $1.30 billion in DraftKings Inc. (NASDAQ:DKNG), up from 28 the preceding quarter worth $1.32 billion.
In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and DraftKings Inc. (NASDAQ:DKNG) was one of them. Here is what the fund said:
“Shares of DraftKings Inc. (NASDAQ:DKNG) fell in the quarter, as stocks of online gaming companies were under pressure. Sports betting and i-gaming are rolling out with great fanfare and success across the country; however, investors seem concerned about competition and margins. Most participants are spending heavily on marketing and promotions, which is cutting into margins. We see this as worthy investment in customer acquisition at a moment in time when revenues are just building. We continue to believe that online sports betting and gaming will be enormous industries, that DraftKings Inc. (NASDAQ:DKNG) will be a leading player. We think the business will have high margins as it matures. We believe we are underwriting the business conservatively and see much upside in the long term.”
3. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 20
Decline in Share Price Over Past Six Months: 63.49%
Upstart Holdings, Inc. (NASDAQ:UPST) owns and runs a cloud-based lending platform that uses artificial intelligence technology. The company recently launched a new mobile-first auto retail platform for car dealers, resulting in an over 7% spike in the shares. The platform gives dealers more options to customize according to the specific needs of the shoppers. Car manufacturer Volkswagen has recently joined a growing list of car firms that have established partnerships with Upstart.
On March 31, Stephens analyst Vincent Caintic initiated coverage of Upstart Holdings, Inc. (NASDAQ:UPST) stock with an Equal Weight rating and a price target of $124, noting the firm had a large addressable market and the transaction volume growth was accelerating. However, the analyst cautioned that funding partners, not consumers, seemed like customers of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in Upstart Holdings, Inc. (NASDAQ:UPST) with 4 million shares worth more than $605 million.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“Upstart Holdings, Inc. (NASDAQ:UPST) was another material detractor during the quarter. Upstart is an artificial intelligence (AI) and cloud-based lending platform. Upstart Holdings, Inc. (NASDAQ:UPST) uses over 1600 variables in its AI models. Its lending platform delivers lower default rates, higher approval rates, lower rates for consumers, and higher returns on investment for its bank and institutional clients. As former owners of FICO, we believe Upstart Holdings, Inc. (NASDAQ:UPST) has the potential to be the FICO of the 21st century. Recent stock price volatility has given us an opportunity to follow our investment discipline. During the third quarter of 2021, Upstart’s stock price increased significantly, and we materially reduced our position in the company. Following its most recent earnings release, our value increased but Upstart’s stock price began to decline significantly. With a significantly improved price to value ratio, we added to our position in Upstart. We simply took advantage of stock price volatility to manage risk in the portfolio and improve our returns and our prospective returns.”
2. Robinhood Markets, Inc. (NASDAQ:HOOD)
Number of Hedge Fund Holders: 24
Decline in Share Price Over Past Six Months: 67.76%
Robinhood Markets, Inc. (NASDAQ:HOOD) owns and runs a financial services platform. The company is reportedly working on the launch of retirement accounts in a bid to challenge traditional brokerages. As part of this strategy, the application will soon support traditional IRA, Roth IRA, and pension accounts. The firm also recently launched a zero-fee cash card allowing users to get rewarded for investing and spending. The initiatives have failed to bring significant respite to the shares that have been sliding in the past few weeks
On March 30, JPMorgan analyst Kenneth Worthington kept an Underweight rating on Robinhood Markets, Inc. (NASDAQ: HOOD) with a price target of $11, noting that “a market selloff had hobbled accounts growth and activity in what is typically the seasonally strongest quarter of the year”.
At the end of the fourth quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Robinhood Markets, Inc. (NASDAQ: HOOD), up from 20 in the previous quarter worth $4.6 billion.
In its Q4 2021 investor letter, Claret Asset Management, an asset management firm, highlighted a few stocks and Robinhood Markets, Inc. (NASDAQ: HOOD) was one of them. Here is what the fund said:
“Robinhood Markets, Inc. (NASDAQ: HOOD) went public at $38 a share at the end of July of this year. After a oneday decline of 8%, it proceeded to rise to a peak of $85 in a matter of 4 days before settling down around $40 in September. Then, we found out that Robinhood Markets, Inc. (NASDAQ: HOOD) does not appear to understand the margin rules that apply to their client’s trades… and got fined by the Securities Exchange Commission. As of today, Robinhood Markets, Inc. (NASDAQ: HOOD) is trading below $20, at 57 times earnings, approximately half of its IPO price. Caveat emptor… Buyer beware.”
1. GAN Limited (NASDAQ:GAN)
Number of Hedge Fund Holders: 10
Decline in Share Price Over Past Six Months: 69.26%
GAN Limited (NASDAQ: GAN) provides internet gambling software. The earnings of the firm in the fourth quarter of 2021, released in mid-March, failed to impress investors. Dermot Smurfit, the CEO of the firm, acknowledged that the financial results of the fourth quarter were “adversely affected by the volatile sports margin in the B2C segment”. However, the CEO also noted that this was consistent with other international operators and some of the downside had been offset by gains in new customer growth.
On March 23, Northland analyst Greg Gibas downgraded GAN Limited (NASDAQ: GAN) stock to Market Perform from Outperform, highlighting that the B2B business of the firm was growing slower than expected and the fourth quarter results were disappointing.
At the end of the fourth quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $44 million in GAN Limited (NASDAQ: GAN), compared to 16 the preceding quarter worth $55 million.
In its Q4 2020 investor letter, Symmetry Invest, an asset management firm, highlighted a few stocks and GAN Limited (NASDAQ:GAN) was one of them. Here is what the fund said:
“We have been following GAN Limited (NASDAQ: GAN) for a long time while it was a small AIM-listed stock. The company had gained a strong market position in New Jersey when the state opened up the market for online casinos in 2014, and also exhibited solid growth and a compelling market position in Italy. But at the same time, it was loss-making, had to constantly raise new capital and the growth was not “overwhelming”. We still spent time familiarizing ourselves with the company, as we could see that their market position in the US could become a strength in due time. The first crucial news came in mid-2018 when the PASPA rule was removed, and all states in the US were free to self-regulate sports betting and casino. This presented itself a clear opportunity for GAN Limited (NASDAQ: GAN), but as they still did not have a sports betting product, we bided our time. When Pennsylvania, in 2019, also allowed sports betting and casino, and we saw how Fanduel/Betfair started to gain a strong market position building on GAN’s platform, we initiated a purchase. At the time the stock was still only increasing slightly, and the financials were still not good (it takes time for leading KPIs to affect the numbers). We continued to buy in light of willingness from more states to open up, and GAN signing on more and more customers. In May 2020, GAN Limited (NASDAQ: GAN) chose to substitute the small AIM exchange for Nasdaq in the US. As reported revenue began to rise +100% YoY and margins followed, the stock reacted strongly. The stock thus ended up rising 1.000% from mid-2018 to mid-2020. Even during 2019, one could still buy the stock for 3-8 USD (the stock was listed in the UK and in pence at the time). Today it is traded for approximately 20 USD.
GAN is therefore a great example of how you can follow a company for a long time, do your analysis, and be ready to buy in when the business model is facing the crucial inflection point.”
You can also take a peek at 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 and Top Robinhood Stocks Popular on Reddit.
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Disclosure. None. 10 Reddit Stocks That Are Getting Crushed is originally published on Insider Monkey.
