In this article, we discuss the 10 Reddit’s WallStreetBets stocks that are tumbling. If you want to skip our detailed analysis of these stocks, go directly to the 5 Reddit’s WallStreetBets Stocks That are Tumbling.
Social media has been exerting an ever-greater influence on the movement of markets over the past few months. The mainstream finance world, after suffering billions in losses as a result of this new phenomenon at the turn of the year, is now closely monitoring forums like the WallStreetBets subgroup, which has a user base of almost 11 million, on internet platform Reddit to predict future market direction. The explosion in popularity for this group is evident as it only had around 1.6 million members in December 2020.
Some of the stocks that are presently popular on WallStreetBets include Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Tesla, Inc. (NASDAQ: TSLA), and Apple Inc. (NASDAQ: AAPL), among others. Investors who are monitoring this group for insights should understand that not all stocks hyped up on WallStreetBets are rising. In fact, many stocks that retail investors piled onto over the past few days in anticipation of an earnings boost have tumbled.
According to Fortune magazine, part of this is explained by the decline in retail investor interest in equities that had peaked during the coronavirus lockdowns – investment bank Morgan Stanley claims that retail investors were responsible for close to 15% of total volume on the market in September last year. Fortune reports that Google searches related to trading have gone down dramatically in the past few weeks. The weak business fundamentals of the firms favored by retail investors – often referred to as meme stocks – have also played their part in this decline.
It is important to track stocks that are popular on WallStreetBets but still registering losses because a careful look at these firms can give investors valuable insight into the disruptive forces of the market. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Our Methodology
With this context in mind, here is our list of the 10 Reddit’s WallStreetBets stocks that are tumbling. These were ranked keeping in mind the percentage losses over the past five days and the hype on Reddit forum WallStreetBets.
Reddit’s WallStreetBets Stocks That are Tumbling
10. Palo Alto Networks, Inc. (NYSE: PANW)
Number of Hedge Fund Holders: 64
Percentage Losses Over Last Five Days: 3.18%
Palo Alto Networks, Inc. (NYSE: PANW) is placed tenth on our list of 10 Reddit’s WallStreetBets stocks that are tumbling. The company markets cybersecurity solutions and is based in California. The company stands to benefit from a recent plan of the US government that envisions mandatory cybersecurity requirements for critical infrastructure firms. The administration of US President Joe Biden has already asked federal agencies to come up with cybersecurity goals in this regard.
On July 26, investment advisory Loop Capital downgraded Palo Alto Networks, Inc. (NYSE: PANW) stock to Hold from Buy and revised the price target down to $410 from $465, noting that collective growth rates in the security software space may have peaked.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based firm Viking Global is a leading shareholder in Palo Alto Networks, Inc. (NYSE: PANW) with 2.5 million shares worth more than $807 million.
Unlike Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Tesla, Inc. (NASDAQ: TSLA), and Apple Inc. (NASDAQ: AAPL), Palo Alto Networks, Inc. (NYSE: PANW) is one of Reddit’s WallStreetBets stocks that are tumbling.
9. Corsair Gaming, Inc. (NASDAQ: CRSR)
Number of Hedge Fund Holders: 9
Percentage Losses Over Last Five Days: 3.80%
Corsair Gaming, Inc. (NASDAQ: CRSR) is ranked ninth on our list of 10 Reddit’s WallStreetBets stocks that are tumbling. The firm makes and sells gaming peripherals and is headquartered in California. In earnings results for the second quarter, posted on August 3, the company reported earnings per share of $$0.36, missing market estimates by $0.03. The revenue over the period was close to $473 million, up 24% compared to the revenue over the same period last year but missing expectations by $2.2 million.
On August 4, investment advisory Credit Suisse downgraded Corsair Gaming, Inc. (NASDAQ: CRSR) stock to Neutral from Outperform and lowered the price target to $31 from $43, noting that there had been a faster-than-expected normalization in demand and profit for the firm.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Corsair Gaming, Inc. (NASDAQ: CRSR) with 414,300 shares worth more than $13.7 million.
In contrast to Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Tesla, Inc. (NASDAQ: TSLA), and Apple Inc. (NASDAQ: AAPL), Corsair Gaming, Inc. (NASDAQ: CRSR) is one of Reddit’s WallStreetBets stocks that are tumbling.
8. Plug Power Inc. (NASDAQ: PLUG)
Number of Hedge Fund Holders: 25
Percentage Losses Over Last Five Days: 5.06%
Plug Power Inc. (NASDAQ: PLUG) is a New York-based firm that markets hydrogen fuel cell technology. It is placed eighth on our list of 10 Reddit’s WallStreetBets stocks that are tumbling. The firm posted earnings results for the second quarter on August 5, reporting earnings per share of -$0.18, missing market predictions by $0.11. The revenue over the period was $124 million, up 83% compared to the revenue over the same period last year and beating market estimates by $13 million.
On August 6, investment advisory B Riley maintained a Buy rating on Plug Power Inc. (NASDAQ: PLUG) stock but lowered the price target to $45 from $51, noting that the margins for the firm remained under pressure despite billings guidance boost.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Plug Power Inc. (NASDAQ: PLUG) with 12 million shares worth more than $433 million.
Plug Power Inc. (NASDAQ: PLUG) is one of Reddit’s WallStreetBets stocks that are tumbling, unlike Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL).
In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Plug Power Inc. (NASDAQ: PLUG) was one of them. Here is what the fund said:
“We also closed our short position in Plug Power this quarter as the market was subsumed with enthusiasm over their recent acquisitions, resulting in an almost 80% rally in the stock over ten trading days. Our decision to exit was painful at the time as we were forced to reconcile with a collective exuberance that was (and is, in our opinion) not grounded reality. In hindsight, it was the correct decision as we avoided most of its recent vertical trajectory.”
7. IAC/InterActiveCorp (NASDAQ: IAC)
Number of Hedge Fund Holders: 63
Percentage Losses Over Last Five Days: 5.26%
IAC/InterActiveCorp (NASDAQ: IAC) is a media and internet company headquartered in New York. It is ranked seventh on our list of 10 Reddit’s WallStreetBets stocks that are tumbling. The firm reported earnings for the second quarter on August 4, posting earnings per share of $2.02 and a revenue of $820 million, up 14% year-on-year. Last month, Joey Levin, the CEO of the company, had told news platform CNBC that the firm was increasing investments in blockchain technology through an incubator program.
On August 6, investment advisory Piper Sandler maintained an Overweight rating on IAC/InterActiveCorp (NASDAQ: IAC) stock but lowered the price target to $158 from $180, underlining that the second quarter results of the firm looked solid.
At the end of the first quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $2.1 billion in IAC/InterActiveCorp (NASDAQ: IAC), down from 67 the preceding quarter worth $2.2 billion.
IAC/InterActiveCorp (NASDAQ: IAC) is one of Reddit’s WallStreetBets stocks that are tumbling, in contrast to Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL).
In its Q4 2020 investor letter, Alphyn Capital Management, an investment management firm, highlighted a few stocks and IAC/InterActiveCorp (NASDAQ: IAC) was one of them. Here is what the fund said:
“On November 22nd, IAC announced it would look into spinning out Vimeo, its Software-As-A-Service video creation company, on the back of strong revenue growth and robust investor interest. To quote from the IAC shareholder letter “We just tested Vimeo’s ability to access capital with a small private fundraise to bolster Vimeo’s balance sheet and to repay capital to IAC. We entered into agreements today to raise $150 million of equity capital at Vimeo from outside investors at an implied enterprise value of $2.75 billion, a large multiple of current revenue. We don’t normally think in terms of revenue multiples, but we found real appetite among investors who do – we had more interest in Vimeo than the number of shares we were willing to let Vimeo sell.” In other words, IAC will exploit current valuations while the market is willing to pay for it. This has so far been a good example of our defensive approach towards investing software companies from the cover of an undervalued holding company run by intelligent capital allocators.”
6. Exact Sciences Corporation (NASDAQ: EXAS)
Number of Hedge Fund Holders: 41
Percentage Losses Over Last Five Days: 5.42%
Exact Sciences Corporation (NASDAQ: EXAS) is placed sixth on our list of 10 Reddit’s WallStreetBets stocks that are tumbling. The company makes and sells cancer screening and diagnostic products. It operates from Wisconsin. On July 28, the firm posted earnings for the second quarter, reporting earnings per share of -$1.03, missing market estimates by $0.27. The revenue over the period was $434 million, up 61% compared to the revenue over the same period last year and beating estimates by $14 million.
On July 29, investment advisory Baird kept an Outperform rating on Exact Sciences Corporation (NASDAQ: EXAS) stock but lowered the price target to $127 from $157, noting that the mixed second quarter results for the firm had been overshadowed by negative billing adjustment.
At the end of the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in Exact Sciences Corporation (NASDAQ: EXAS), up from 40 in the previous quarter worth $1.8 billion.
Exact Sciences Corporation (NASDAQ: EXAS) is one of Reddit’s WallStreetBets stocks that are tumbling, unlike Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), Tesla, Inc. (NASDAQ: TSLA), Apple Inc. (NASDAQ: AAPL).
In its Q4 2020 investor letter, RiverPark Advisors, LLC, an asset management firm, highlighted a few stocks and Exact Sciences Corporation (NASDAQ: EXAS) was one of them. Here is what the fund said:
“EXAS shares were the final top contributor for the quarter on both the acquisition of Thrive Earlier Detection, a leading multi-cancer screening company, and strong earnings. Third quarter revenue grew 87% to $408 million, including $102 million from COVID19 testing, and the company reported a 77% gross margin and $94 million of adjusted EBITDA, up 16% year over year.
The company’s Thrive acquisition combines cancer screening pioneers, specifically integrating Thrive’s early-stage cancer screening test CancerSEEK, with Exact’s scientific platform, clinical organization, and commercial infrastructure (the largest commercial team by far with over 1,000 people in cancer diagnostics). Thrive’s recent CancerSEEK study is the only liquid biopsy clinical trial that screens undiagnosed patients. Combined with Exact’s own multi-cancer liquid biopsy screening test (management disclosed compelling data on it for the first-time), Exact has quickly pivoted from its single cancer screening tests (Cologuard for colon cancer and Oncotype for breast cancer) and is now positioned as a leader in the $25 billion+ multi-cancer screening market.”
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Disclosure. None. 10 Reddit’s WallStreetBets Stocks That are Tumbling is originally published on Insider Monkey.
