In this article, we discuss 10 Reddit stocks that are getting crushed in March. If you want to see some more stocks in this selection, click These 5 Reddit Stocks Are Getting Crushed in March.
Uncertainty is the prevailing underlying theme of the 2022 stock market, and the Russia-Ukraine conflict paired with raging inflation has caused the major indexes to run red quite often since February 24. The S&P 500 fell 3.1% in February, and year-to-date the index has fallen about 4.12% as of March 29, whereas the Dow and Nasdaq Composite have declined 4.15% and 8.38%, respectively.
Market Dips Do Not Represent A Buying Opportunity
Greg Branch, a CNBC contributor and partner at financial advisory firms 1847 Financial and Veritas Financial told Fortune on March 23 that the dips in the S&P 500 and Nasdaq since their 2021 peaks do not indeed reflect a buying opportunity. He believes that in the rising rates environment, earnings will notably decline and multiple expansion will be difficult. He also sees multiple contractions on the horizon.
Stock market outlook in this economic backdrop varies greatly. For example, while there are prominent market bears, Goldman Sachs announced on March 30 that $93 billion has been invested in US equities since the beginning of 2022, signaling that the trading momentum of 2021 has continued into this year as well. Goldman noted that meme stocks that were once hammered due to higher bond yields remained hot with retail investors, racking up the biggest gains for them as share prices more than doubled.
While the long-term bull market remains intact, many investors who have suffered significant losses remain wary of the rebound in equities. Redditors are known for their massive influence in the stock market but sometimes their bets result in huge losses. Some of the Reddit stocks that are getting crushed in March include Zoom Video Communications, Inc. (NASDAQ:ZM), JD.com, Inc. (NASDAQ:JD), and Rivian Automotive, Inc. (NASDAQ:RIVN), among others discussed in detail below.
Image By peshkov – Adobe Stock
Our Methodology
We scoured multiple Reddit threads to gain insights on the stocks which have amassed the biggest losses for most Redditors in March. We have mentioned the 1-month decline in share prices as of March 29, as well as the analyst ratings for all stocks.
Data from 900+ elite hedge funds tracked by Insider Monkey at the end of December 2021 was used to identify the number of hedge funds that hold stakes in each firm.
These Reddit Stocks Are Getting Crushed in March
10. Redfin Corporation (NASDAQ:RDFN)
1-Month Decline in Share Price as of March 29: 10.22%
Number of Hedge Fund Holders: 18
Headquartered in Seattle, Washington, Redfin Corporation (NASDAQ:RDFN) operates as a residential real estate brokerage company, in addition to running an online real estate marketplace. Over the last month, the stock has declined 10.22% as the housing market crash predictions run hot in 2022.
On February 18, Stephens analyst John Campbell downgraded Redfin Corporation (NASDAQ:RDFN) to Equal Weight from Overweight with a price target of $26, down from $65, in light of the company’s fourth quarter earnings. While he believes Redfin Corporation (NASDAQ:RDFN) “has some positives cooking” which will result in profit improvements, the analyst also thinks investors are likely to be concerned about the business model and the macro backdrop. With that context in mind, Campbell recommends moving to the sidelines as he waits for a better entry point.
Among the hedge funds tracked by Insider Monkey, 18 funds were bullish on Redfin Corporation (NASDAQ:RDFN) at the end of December 2021, up from 12 funds in the earlier quarter. Bares Capital Management is the leading shareholder of the company, with 12.8 million shares worth $493.2 million.
In addition to Zoom Video Communications, Inc. (NASDAQ:ZM), JD.com, Inc. (NASDAQ:JD), and Rivian Automotive, Inc. (NASDAQ:RIVN), Redfin Corporation (NASDAQ:RDFN) is a Reddit stock that was hammered in March.
Here is what Shadowridge Value LLC has to say about Redfin Corporation (NASDAQ:RDFN) in its Q4 2021 investor letter:
“Redfin (RDFN) – A newer investment I have made while attempting to capitalize on the recent market declines is Redfin. Unfortunately, if I had the foresight to wait another couple weeks, I could’ve built our positions in the company at a 30%+ discount to our cost basis. While I don’t think there is much of a lesson to take away from short term market gyrations, it has made me reconsider how quickly I attempt to build an entire position. Patience is key. Based on my track record however, I half-jokingly have concluded my base assumption should be that if I’m buying stock, shares will continue lower and if I am not buying stock, shares will immediately march upwards!
In line with their stated mission, Redfin redefines the residential real estate experience in the consumer’s favor. They do this by utilizing a technology stack that helps remove legacy transaction costs and benefits from the high visibility of their popular online portal. The Redfin website provides incredibly low-cost lead generation. This in turn enables the company to offer a compelling customer value proposition as a full-suite brokerage at significantly reduced commissions. The typical real estate brokerage earns 5-6% on a real estate transaction whereas Redfin earns 4% on a transaction if both ends of the sale (listing and buy side) are handled by them. Listing fees are only 1.5%, as low as 1% in some cases.
1-2% commission reductions may not sound like much, but that’s meaningful savings when it comes to a high-priced item like a home! Real estate remains an isolated industry where far too much of the economics are still siphoned off by middlemen hiding behind archaic practices. It would be one thing to forgo the savings if the Redfin service level were vastly inferior (and in fact competition will claim it is), but I believe Redfin to be a far better, easier, more efficient, and cheaper solution for consumers. With just a ~1.2% market share in the massive $2 trillion (by volume) / $100 billion (assuming 5% commission) US residential real brokerage industry, Redfin has plenty of room to rapidly expand operations and take market share in its core service for many years to come…” (Click here to see the full text)
9. SoFi Technologies, Inc. (NASDAQ:SOFI)
1-Month Decline in Share Price as of March 29: 15.10%
Number of Hedge Fund Holders: 24
SoFi Technologies, Inc. (NASDAQ:SOFI) is a California-based digital financial services company that offers student loans, personal loans, and home loans. In the last month, SoFi Technologies, Inc. (NASDAQ:SOFI) has dropped by 15.1% and many Redditors who were bullish on the stock posted big losses.
On March 16, CEO Anthony Noto disclosed in a regulatory filing that he purchased 17,400 shares of SoFi Technologies, Inc. (NASDAQ:SOFI). The transaction was worth $149,800. On March 17, the CEO bought another 34,000 shares of common stock in a total transaction size of $303,000.
Morgan Stanley analyst Betsy Graseck downgraded SoFi Technologies, Inc. (NASDAQ:SOFI) to Equal Weight from Overweight with a price target of $10, down from $18. The analyst believes that consensus estimates for SoFi Technologies, Inc. (NASDAQ:SOFI) are at risk, given another possible extension of the federal student loan moratorium which can likely “bleed into” 2023 and beyond.
According to the fourth quarter database of Insider Monkey, 24 hedge funds were bullish on SoFi Technologies, Inc. (NASDAQ:SOFI), down from 33 funds in the prior quarter. Silver Lake Partners is the largest shareholder of the company, with more than 31 million shares worth $492.5 million.
Here is what RiverPark Large Growth Fund has to say about SoFi Technologies, Inc. (NASDAQ:SOFI) in its Q4 2021 investor letter:
“SoFi Technologies: During 3Q, we purchased a small position in SoFi, a neobank or digital bank, operating exclusively online without any physical branches. The company provides a comprehensive consumer finance product suite including credit cards, student loan refinancing, mortgages, personal loans and automated investing. SoFi has a $2 trillion dollar market opportunity by taking share from incumbent banks (such as Wells Fargo and Bank of America), as the incumbents have first generation technology, and the younger generation generally prefer digital banks.
Despite impressive 3Q results, SOFI shares struggled along with other fast-growing technology stocks. SOFI added 377,000 new customers in the quarter, its second-highest quarterly increase in its history. The company increased its total products sold by 108%, and its revenue by 28%. SoFi also reported $10 million of EBITDA for a 3.6% margin and increased its revenue and adjusted EBITDA guidance for the year. We expect the company to grow revenue by more than 30% annually for the next several years and grow its margin by cross-selling more profitable products—with low or no customer acquisition costs–and increasing scale, leading to profit growth of more than 50% annually for the foreseeable future. We know the SOFI management team well from previous positions over the past two decades and have great confidence in their ability to execute on this enormous growth potential.”
8. Wayfair Inc. (NYSE:W)
1-Month Decline in Share Price as of March 29: 12.03%
Number of Hedge Fund Holders: 28
Wayfair Inc. (NYSE:W) was founded in 2002 and is headquartered in Boston, Massachusetts. Wayfair Inc. (NYSE:W) is an e-commerce company that sells furniture, housewares, and home improvement products. The stock has declined 12% in the last month, and it was a popular bet of Redditors that resulted in losses.
On February 24, Wayfair Inc. (NYSE:W) posted its fourth quarter results, reporting a loss per share of $0.92, missing estimates by $0.22. The $3.25 billion revenue dropped 11.41% year-over-year, missing market consensus by approximately $25 million.
Barclays analyst Adrienne Yih on March 24 lowered the price target on Wayfair Inc. (NYSE:W) to $123 from $156 and maintained an Equal Weight rating on the shares after the Q4 results. The analyst cited decreasing active customers and rising input costs from macro events, which may lead to lower demand and margin pressure through the year.
Among the hedge funds tracked by Insider Monkey at the end of Q4 2021, 28 funds were bullish on Wayfair Inc. (NYSE:W), compared to 31 funds in the earlier quarter. Spruce House Investment Management owns the biggest stake in the company, with 4.80 million shares worth approximately $912 million.
Here is what Artisan Mid Cap Fund has to say about Wayfair Inc. (NYSE:W) in its Q4 2021 investor letter:
“Wayfair is a leading online furniture retailer. The company was a pandemic beneficiary in 2020 as physical retail store closures and a wave of consumer home investments led to a dramatic increase in sales. In 2021, the company understandably experienced a material slowdown in growth as the pandemic benefits normalized, though we still saw the longer term profit cycle potential as compelling with lightly penetrated markets—domestically and internationally—for online home goods and an opportunity to move into adjacent categories (such as business-to-business furniture procurement). This fact pattern changed when our research uncovered the company losing market share to key competitors in the home category. We are concerned customer acquisition efficacy could be deteriorating, and another investment cycle may be required to reinvigorate growth. We parked our position back into the GardenSM during Q4 as we await signs the longer term growth drivers are taking hold.”
7. XPeng Inc. (NYSE:XPEV)
1-Month Decline in Share Price as of March 29: 23.23%
Number of Hedge Fund Holders: 29
XPeng Inc. (NYSE:XPEV), a Chinese manufacturer of smart electric vehicles, was a popular stock held by Redditors which amassed significant losses in March. The shares declined 23.23% in the last month. On March 28, XPeng Inc. (NYSE:XPEV) posted a loss per share of $0.22 for the fourth quarter of 2021, topping market estimates by $0.10.
On March 29, Barclays analyst Jiong Shao slashed the price target on XPeng Inc. (NYSE:XPEV) from $45 to $39 and reiterated an Overweight rating on the shares. The analyst believes that the company’s Q4 earnings are not the focus. Investors are more concerned about the Q1 delivery guidance that was 10% below expectations, given component supply shortages and Covid-related production disruptions. However, XPeng Inc. (NYSE:XPEV) highlighted strong order momentum to extend delivery into June, noted the analyst.
According to the fourth quarter database of Insider Monkey, 29 hedge funds held long positions in XPeng Inc. (NYSE:XPEV), compared to 25 funds in the last quarter. Chase Coleman’s Tiger Global Management is the biggest shareholder of the company, with 6.2 million shares worth $313.5 million.
XPeng Inc. (NYSE:XPEV) was one of the top losers on Reddit in March, just like Zoom Video Communications, Inc. (NASDAQ:ZM), JD.com, Inc. (NASDAQ:JD), and Rivian Automotive, Inc. (NASDAQ:RIVN).
6. Rivian Automotive, Inc. (NASDAQ:RIVN)
1-Month Decline in Share Price as of March 29: 24.29%
Number of Hedge Fund Holders: 47
Rivian Automotive, Inc. (NASDAQ:RIVN) is a California-based manufacturer of electric adventure vehicles. It is one of the most prominent bets of Redditors that crashed in the last month, with shares declining almost 24%.
On March 10, Rivian Automotive, Inc. (NASDAQ:RIVN) reported financial results for the fourth quarter. The company posted a GAAP loss per share of $4.83, missing market consensus by $2.47. The $54 million revenue also fell short of analysts’ predictions by $6.72 million.
Mizuho analyst Vijay Rakesh maintained a Buy recommendation on Rivian Automotive, Inc. (NASDAQ:RIVN) on March 24, but slashed the price target to $95 from $100. The analyst “modestly” adjusted near-term expectations for the company given the first half of 2022 will present supply chain challenges, but a better second half is expected as the macro backdrop improves.
Among the hedge funds tracked by Insider Monkey, 47 funds reported owning stakes worth over $9 billion in Rivian Automotive, Inc. (NASDAQ:RIVN) at the end of the fourth quarter of 2021.
Here is what Longleaf Partners Fund has to say about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q4 2021 investor letter:
“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 – Rivian is a prime example.”
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Disclosure: None. These 10 Reddit Stocks Are Getting Crushed in March is originally published on Insider Monkey.
