In this article, we discuss the 5 Reddit stocks that flopped in 2021. If you want to read our detailed analysis of these stocks, go directly to the 10 Reddit Stocks that Flopped in 2021.
5. Workhorse Group Inc. (NASDAQ:WKHS)
Number of Hedge Fund Holders: 11
Year-to-Date Decline in Share Price: 70%
Workhorse Group Inc. (NASDAQ:WKHS) is a technology company that markets battery-electric vehicles. The stock has fallen sharply since the beginning of November amid reports that the company is under investigation by the Department of Justice and the Securities and Exchange Commission.
Workhorse Group Inc. (NASDAQ:WKHS) missed market expectations on earnings for the third quarter. DA Davidson, Cowen, and B Riley have all lowered their price targets on the stock to reflect the negative sentiment around the firm.
At the end of the third quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $17 million in Workhorse Group Inc. (NASDAQ:WKHS), down from 13 in the preceding quarter worth $60 million.
4. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Number of Hedge Fund Holders: 16
Year-to-Date Decline in Share Price: 29%
Virgin Galactic Holdings, Inc. (NYSE:SPCE) is an integrated aerospace firm based in New Mexico. The share price of the company has fallen amid repeated delays to space travel programs and the recent expiry of the lock-up period for the stock.
In earnings results for the third quarter, Virgin Galactic Holdings, Inc. (NYSE:SPCE) missed market estimates on earnings per share by $0.04. The revenue over the period was $2.5 million, beating estimates by $0.8 million.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Virgin Galactic Holdings, Inc. (NYSE:SPCE) with 1.2 million shares worth more than $32 million.
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.”
2. Vroom, Inc. (NASDAQ:VRM)
Number of Hedge Fund Holders: 23
Year-to-Date Decline in Share Price: 62%
Vroom, Inc. (NASDAQ:VRM) runs an ecommerce platform for buying and selling cars. The stock has been hit in recent weeks following reports that used car platforms were being investigated by the government over hundreds of complaints regarding delayed registrations and poor customer service.
Truist analyst Naved Khan recently lowered the price target on Vroom, Inc. (NASDAQ:VRM) stock to $40 from $54 but kept a Buy rating, noting that supply chain issues and labor shortages were causing “transitory headwinds” for the firm.
At the end of the third quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $119 million in Vroom, Inc. (NASDAQ:VRM), up from 21 in the preceding quarter worth $180 million.
In its Q3 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Vroom, Inc. (NASDAQ:VRM) was one of them. Here is what the fund said:
“Vroom, Inc. (VRM) was down 47.31% after reporting earnings that beat expectations but disappointed on guidance. Revenue of $761.9M beat consensus of $647.4M with EBITDA of -$60.7M slightly beating consensus of -$60.9M. The company guided for total revenue of $858-$891M versus consensus of $699M, but both gross margins and EBITDA disappointed. The company’s gross margin guidance of 6.2% was well below expectations of 8.8% leading to EBITDA of -$100M to -$92M against expectations -$59.4M as the company continues to invest for growth. The company also announced the appointment of Robert Krakowiak as CFO effective immediately, with David Jones remaining with the company through the end of November.”
1. iRhythm Technologies, Inc. (NASDAQ:IRTC)
Number of Hedge Fund Holders: 27
Year-to-Date Decline in Share Price: 58%
iRhythm Technologies, Inc. (NASDAQ:IRTC) is a digital healthcare company based in California. The company has had a mixed year so far with regards to earnings. A major dent in the share prices was caused earlier this year by the release of Medicare reimbursement rates that were below expectations.
Citi analyst Joanne Wuensch has a Neutral rating on iRhythm Technologies, Inc. (NASDAQ:IRTC) stock with a price target of $120. The company has a market cap of $2.9 billion and posted $265 million in revenue last year.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in iRhythm Technologies, Inc. (NASDAQ:IRTC) with 615,715 shares worth more than $36 million.
In its Q2 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and iRhythm Technologies, Inc. (NASDAQ:IRTC) was one of them. Here is what the fund said:
“Last quarter, we discussed our decision to meaningfully reduce our position size in iRhythm Technologies after Medicare Administrative Contractor (MAC) Novitas announced a dramatic reimbursement cut for the company’s Zio cardiac monitor. In early April, Novitas revisited its decision and announced it was increasing the reimbursement rate. Unfortunately, the new price still falls significantly below our expectations, and iRhythm also announced it would no longer provide Zio services to Medicare fee-for-service patients (25% of the company’s revenue). While we believe the Zio is a substantial upgrade from the Holter monitor given its smaller size and algorithm-based analytics, we decided to end our investment campaign shortly after the announcement in April given our lack of visibility into the profit cycle.”
You can also take a peek at 15 Best High Volume Stocks to Buy Now and 10 Best Up and Coming Stocks to Invest In.
