In this article, we discuss 5 companies that recently announced layoffs and hiring freezes amid recession fears. If you want to see more stocks in this list, click These 10 Companies Recently Announced Layoffs, Hiring Freeze Amid Recession Fears.
5. Robinhood Markets, Inc. (NASDAQ:HOOD)
Number of Hedge Fund Holders: 19
Robinhood Markets, Inc. (NASDAQ:HOOD) operates a financial services platform in the United States, allowing users to invest in stocks, exchange traded funds, options, gold, and cryptocurrencies. The company announced at the end of April that it is laying off 9% of its full-time employees, which amounts to approximately 300 people. The stock has fallen about 52.5% year to date as of June 8, trading at a mere $9 compared to its peak at $85 per share after a July 2021 IPO.
The former tech unicorn has faced several internal struggles as well as the broader macro crunch. In November 2021, the company faced a data breach, which impacted its customers immensely. The company has grown massively since its IPO, and to handle the expanded operations, the headcount jumped from 700 to 3,800 employees between 2019 and 2021. Doing so duplicated many roles in the company, and employees had to be let go in order to maintain its balance sheet.
On May 13, Piper Sandler analyst Richard Repetto told investors that Robinhood Markets, Inc. (NASDAQ:HOOD) shares were up 24% as news broke that crypto exchange FTX founder Sam Bankman-Fried picked up a 7.6% stake. While it remains unclear what Bankman-Fried’s intentions are in purchasing the position, noted the analyst, he believes that Bankman-Fried’s reputation and knowledge of the crypto economy could benefit Robinhood Markets, Inc. (NASDAQ:HOOD). The analyst pointed out that Robinhood Markets, Inc. (NASDAQ:HOOD) has recently made a targeted plan to expand its crypto offering. He maintained a Neutral rating on the shares with an $11 price target.
According to Insider Monkey’s database, 19 hedge funds were bullish on Robinhood Markets, Inc. (NASDAQ:HOOD) at the end of Q1 2022, compared to 24 funds in the prior quarter. Cathie Wood’s ARK Investment Management held the biggest position in the company, comprising 30.35 million shares worth $410 million.
Here is what Claret Asset Management has to say about Robinhood Markets, Inc. (NASDAQ:HOOD) in its Q4 2021 investor letter:
“Robinhood went public at $38 a share at the end of July of this year. After a one day decline of 8%, it proceeded to rise to a peak of $85 in a matter of 4 days before settling down around $40 in September. Then, we found out that the company does not appear to understand the margin rules that apply to their client’s trades… and got fined by the Securities Exchange Commission. As of today, it is trading below $20, at 57 times earnings, approximately half of its IPO price. Caveat emptor… Buyer beware.”
4. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 144
Uber Technologies, Inc. (NYSE:UBER) offers technology applications in the United States, Canada, Latin America, Europe, the Middle East, Africa, and the Asia Pacific, operating through three segments – Mobility, Delivery, and Freight.
Uber Technologies, Inc. (NYSE:UBER) CEO Dara Khosrowshahi said in the beginning of May that the company is shifting its spending patterns in order to streamline profitability efforts in a dynamic market. In light of the broad selloff in the tech sector, the Uber Technologies, Inc. (NYSE:UBER) CEO reiterated that spending will be controlled on both marketing and incentives, and hiring will be a ‘privilege’, noting that board-level hiring will be even more scrutinized.
On May 31, Jefferies analyst Brent Thill lowered the price target on Uber Technologies, Inc. (NYSE:UBER) to $50 from $65 and kept a Buy rating on the shares. The analyst has cut his estimates across 11 internet companies, slashing his 2023 revenue estimates by 0%-6% and his price targets for the group by about 11%, considering the worsening economic backdrop.
In Q1 2022, 144 hedge funds were bullish on Uber Technologies, Inc. (NYSE:UBER), down from 153 funds in the prior quarter. Brad Gerstner’s Altimeter Capital Management held a significant position in the company, consisting of 17 million shares worth about $607 million.
Here is what ClearBridge Large Cap Growth Strategy has to say about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2021 investor letter:
“We have also been looking for multi-year secular trends outside of the IT and Internet sectors to help us maintain a portfolio that can perform well in markets with varied sector or factor leadership. In particular, electrification of the global economy and the transition to electric vehicles (EVs) are areas where we continue to add exposure. We are investing in the brains behind EVs through NXP in the control center and Aptiv for safety features. Global rideshare leader Uber will also be a key player in the transition from internal combustion engines to EVs.”
3. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 46
Ford Motor Company (NYSE:F) manufactures and sells Ford trucks, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. The company operates through Automotive, Mobility, and Ford Credit segments.
At the end of April, Ford Motor Company (NYSE:F) let go of 580 U.S. salaried and contract employees as part of its Ford+ turnaround plan, where the company switches focus on electric vehicles from traditional Ford vehicles. The staff was fired from the engineering departments so the company could add on employees with critical skills needed for the Ford+ initiative.
On June 1, Goldman Sachs analyst Mark Delaney lowered the price target on Ford Motor Company (NYSE:F) to $14 from $18 and maintained a Neutral rating on the stock. In U.S. autos and industrial technology, he broadly slashed estimates and price targets to better reflect ongoing supply chain challenges in the short-term and weaker demand in the medium-term, the analyst told investors.
According to Insider Monkey’s first quarter database, 46 hedge funds were bullish on Ford Motor Company (NYSE:F), down from 53 funds in the prior quarter. D E Shaw is the biggest shareholder of the company, with 31.2 million shares worth $528.3 million.
In its Q1 2020 investor letter, Greenlight Capital Fund highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford Motor Company (NYSE:F), lost about half its value.”
2. Swvl Holdings Corp. (NASDAQ:SWVL)
Number of Hedge Fund Holders: N/A
Swvl Holdings Corp. (NASDAQ:SWVL) offers mass ridesharing services, through B2C Swvl Retail, Swvl Travel, and Swvl Business segments. The company was founded in 2017 and is headquartered in Dubai, the United Arab Emirates. At the end of May, two months after listing publicly on the NASDAQ, the company reported that it plans to let go of 32% of its workforce. This means about 400 people will be laid off.
Although Swvl Holdings Corp. (NASDAQ:SWVL) has expanded largely by acquiring several ridesharing companies, the management claims that in order to control expenses and retain profitability amid the tech selloff, the company plans to replace jobs that can be automated through tech investments in the engineering, product, and support functions teams. Although the company has presence in 13 global markets, the layoffs are concentrated in its Dubai and Pakistan offices.
1. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 100
PayPal Holdings, Inc. (NASDAQ:PYPL) is an American fintech firm that enables digital transactions worldwide. In an effort to scale costs, PayPal Holdings, Inc. (NASDAQ:PYPL) closed down its San Francisco office, consequently firing 83 employees. The company is also relocating 131 Irish employees and is providing them the option to resign voluntarily.
On June 6, Wedbush analyst Moshe Katri maintained an Outperform rating and a $110 price target on PayPal Holdings, Inc. (NASDAQ:PYPL) stock, indicating a bottoming of ecommerce normalization patterns, realistic FY22 guidance, and the belief that monetizing PayPal Holdings, Inc. (NASDAQ:PYPL)’s two-side platform is yet in its infancy. The analyst likes the stock at present levels as a contrarian “play” due to the pessimistic investor sentiment paired with an attractive valuation.
Among the hedge funds tracked by Insider Monkey, 100 funds reported long positions in PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of March 2022, compared to 110 funds in the prior quarter. Terry Smith’s Fundsmith LLP is one of the leading position holders in the company, with a stake worth $1.2 billion.
Here is what Aristotle Capital Management Small Cap Equity has to say about Paypal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2022 investor letter:
“We sold our position in PayPal due to the uncertain twelve-month horizon the company faces due to market headwinds from inflation and supply chain issues impacting e-commerce. On a more fundamental level, we sold due to the seismic shift in strategy and our disappointment with management credibility. The company reported weak 2022 guidance, and a strategic shift announced on the fourth quarter 2021 earnings call. The global payments space is undergoing a massive transition due to new technology introduced by both private and new Initial Public Offerings prospects, and we believe that the significant amount of private capital underwriting the new technology will continue to pressure incumbent players, even those as large and seemingly in the sweet spot of e-commerce payments, as PayPal currently is.”
You can also take a look at 10 Best Recession Stocks To Buy and 10 Best Undervalued Dividend Stocks To Buy.
