In this article, we discuss 5 tech stocks other than Palantir Technologies (PLTR) that hedge funds are selling. To take a look at some more tech stocks that hedge funds have been offloading in the past few months, go directly to Hedge Funds Are Selling Palantir Technologies (PLTR) and 9 Other Tech Stocks.
5. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders in Q4 2021: 80
Number of Hedge Fund Holders in Q3 2021: 96
Twilio Inc. (NYSE:TWLO) owns and runs a cloud communications platform. Despite hedge funds offloading the stock, it remains a top cloud pick on Wall Street. Among the hedge funds being tracked by Insider Monkey, California-based investment firm SCGE Management is a leading shareholder in Twilio Inc. (NYSE: TWLO), with 2 million shares worth more than $539 million.
On February 10, Monness analyst Brian White noted that the profit challenges for Twilio Inc. (NYSE:TWLO) were worsening despite a better-than-expected performance in earnings for the fourth quarter of 2021. The analyst cautioned that the magnitude of the loss guidance of the firm was “extraordinary” and “key metrics” were deteriorating. He kept a Neutral rating on the stock, with no price target.
In its Q3 2021 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Twilio Inc. (NYSE:TWLO) was one of them. Here is what the fund said:
“Twilio Inc. (NYSE:TWLO) shares were also a top detractor for the quarter. Just like after 1Q, despite another quarterly beat in 2Q, management guidance–which we believe to be conservative–disappointed some investors. Second quarter revenue of $669 million was up 67% year over year, significantly exceeding management’s guidance of 47%-50% revenue growth. Management guided 3Q21 revenue to 50%-52% revenue growth, which was ahead of expectations, but due to continued investment also guided to a non-GAAP operating loss of $25 million-$30 million, which was below the Street’s forecast of a $12 million loss.
The COVID crisis has accelerated the adoption of the company’s cloud-based, integrated communications platform that allows companies in a wide range of businesses to embed digital communications capabilities (video, chat, voice, SMS, fax, and email) into their customer facing applications without needing to build back-end infrastructure and interfaces. Twilio’s total addressable market is now greater than $40 billion, which should grow by 50% over the next few years, providing a strong secular tailwind for the company. We expect the company’s gross margin to continue to expand from 54% in the second quarter toward management’s long-term goal of 60%-65%, and, as the company grows to scale, we expect its non-GAAP operating margin to expand to 25%.”
4. Twitter, Inc. (NYSE:TWTR)
Number of Hedge Fund Holders in Q4 2021: 83
Number of Hedge Fund Holders in Q3 2021: 94
Twitter, Inc. (NYSE:TWTR) owns and runs a social networking platform. On March 1, Benchmark analyst Mark Zgutowicz initiated coverage of the stock with a Hold rating and no price target, noting that there was “limited ability to scale beyond an otherwise event-driven branding platform” for the firm.
Hedge funds are also bearish on Twitter, Inc. (NYSE:TWTR) stock. At the end of the fourth quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Twitter, Inc. (NYSE:TWTR), compared to 94 in the preceding quarter worth $6.3 billion.
RGA Investment Advisors, in its Q1 2021 investor letter, mentioned Twitter, Inc. (NYSE:TWTR). Here is what the fund has to say in its letter:
“‘The bird has wings’—Twitter’s quarter started off somewhat ominously, with Twitter, Inc. (NYSE:TWTR) the worst performing stock in the S&P 500 following the January 6th insurrection and questions about the stickiness of the user base after permanently suspending the account of President Trump.8 By the end of the quarter, Twitter, Inc. (NYSE:TWTR) was one of the best performers in the index after exceptionally strong fourth quarter earnings and guidance for the year and an upbeat analyst day that highlighted a rapidly evolving product roadmap placing the timeline at the center of ephemeral (fleets), long form (Revue) and voice (Spaces). The improvements to the experience makes the platform more accessible and provides more opportunity to continue growing the user base. Importantly, Twitter, Inc. (NYSE:TWTR) also embraced what we have been calling “creative empowerment” in previewing SuperFollows and a host of features designed to help content creators and contributors monetize their own audience on Twitter, Inc. (NYSE:TWTR) itself. These developments, alongside considerable progress on the advertising platform give us growing conviction that Twitter, Inc. (NYSE:TWTR) will deliver on its largely untapped opportunity—in other words, the value creation opportunity on top of the low multiple we were able to build our position at. Elliot spoke at length about these developments on Yet Another Value Podcast with Andrew Walker and The Business Brew with Bill Brewster, which we invite you to check out.”
3. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders in Q4 2021: 96
Number of Hedge Fund Holders in Q3 2021: 115
Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing solutions. It is one of the Chinese stocks hit on Wall Street amid a regulatory crackdown in Beijing. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA), with 14 million shares worth more than $1.6 billion.
On March 15, JPMorgan analyst Alex Yao downgraded Alibaba Group Holding Limited (NYSE:BABA) stock to Underweight from Overweight and reduced the price target to $65 from $180, noting that rising geopolitical and macro risks were forcing investors to reduce exposure to Chinese internet stocks.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba Group Holding Limited (NYSE:BABA) also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba Group Holding Limited (NYSE:BABA) is the second largest position in the Portfolio.”
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders in Q4 2021: 110
Number of Hedge Fund Holders in Q3 2021: 123
PayPal Holdings, Inc. (NASDAQ:PYPL) provides digital payments solutions. On March 9, Bank of America analyst analyst Jason Kupferberg downgraded the stock to Neutral from Buy and reduced the price target to $107 from $175, underlining that 2022 would be a “transition” year for the firm, a fact “complicated” by the war in Ukraine since the firm had a large presence in European markets.
Wall Street concurs with this analysis on PayPal Holdings, Inc. (NASDAQ:PYPL) stock. At the end of the fourth quarter of 2021, 110 hedge funds in the database of Insider Monkey held stakes worth $9.9 billion in PayPal Holdings, Inc. (NASDAQ:PYPL), down from 123 in the preceding quarter worth $12.8 billion.
In its Q4 2020 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
“For the full year 2020, one of the top performers was PayPal Holdings, Inc. (NASDAQ:PYPL), which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
1. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders in Q4 2021: 224
Number of Hedge Fund Holders in Q3 2021: 248
Meta Platforms, Inc. (NASDAQ:FB) is a diversified technology company. Hedge funds have been offloading the stock in recent months. At the end of the fourth quarter of 2021, 224 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Meta Platforms, Inc. (NASDAQ:FB), compared to 248 in the preceding quarter worth $3.8 billion.
On March 8, Arete analyst Rocco Strauss lowered the price target on Meta Platforms, Inc. (NASDAQ:FB) stock to $220 from $381 and kept a Neutral rating, noting that political uncertainties and supply chain issues would continue to act as headwinds for the company in 2022, in addition to increase in engagement and progress on the metaverse front.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Meta Platforms, Inc. (NASDAQ:FB), while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
You can also take a peek at 15 Best New Tech Stocks to Buy Now and 10 Best Non Tech Stocks To Buy Now.
