5 Reddit Stocks that Flopped in 2021

3. LendingTree, Inc. (NASDAQ:TREE)

Number of Hedge Fund Holders: 24 

Year-to-Date Decline in Share Price: 56%   

LendingTree, Inc. (NASDAQ:TREE) owns and runs an online consumer platform. The company recently posted earnings for the third quarter, reporting earnings per share of -$0.33, missing estimates by $0.19. The updated guidance numbers for the fiscal year were also conservative.  

On October 29, investment advisory Oppenheimer lowered the price target on LendingTree, Inc. (NASDAQ:TREE) stock to $240 from $275 but kept an Outperform rating on the shares, noting the disappointing quarterly results as one of the reasons behind the downgrade. 

At the end of the third quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $161 million in LendingTree, Inc. (NASDAQ:TREE), down from 30 in the previous quarter worth $346 million.

In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and LendingTree, Inc. (NASDAQ:TREE) was one of them. Here is what the fund said: 

“We also exited our position in LendingTree. LendingTree is a two-sided marketplace in the consumer financial services vertical that connects borrowers with lenders. The company has built a brand over more than 15 years that offers savings to borrowers by having banks compete. The company had been acquired by IAC before the financial crisis and then was spun out in the worst of the global financial crisis (GFC). The company had a resurgence following the GFC by adding value in the mortgage market. The company used the strong cash flow generation in the model to expand into adjacencies and diversify the revenue base. The product offering has expanded over the years mostly through acquisition and includes credit cards, personal loans, and insurance.

This diversified strategy had paid dividends amid demand shocks, like the decline in demand for mortgages 18 months ago and then the demand destruction caused by the pandemic. However, diversification has some downsides. While it protects the company from major demand destruction shocks, in our opinion, it has made it hard to drive consistent long-term compounding as products have come in and out of favor due to macro factors. While we think that LendingTree has solved a unique problem, we do not believe it has the same compounding potential going forward and have exited the position in accordance with our process.”