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3 Meme Stocks That Disappointed This Year

Betting on meme stocks is a high-risk and high-reward play. However, apart from the success of a few new millionaires, three stocks have left some meme investors holding the bag.

The meme stock phenomenon involves shareholders buying stocks based on their popularity, trading volume, and short interest. Unlike traditional investors, meme traders don't choose companies based on their fundamentals.

Although meme stocks made many investors rich during 2021, many others went downhill. Some traders bet on meme stocks that looked like they were going to take off but ultimately plummeted.

Below, we've listed three meme stocks that disappointed this year.

1. Robinhood

Discount trading platform Robinhood  (HOOD) - Get Robinhood Markets, Inc. Class A Report had one of the most talked-about initial public offerings (IPOs) of the year when it debuted on the stock exchange in July.

Robinhood became a household name thanks to its no-fee trading, which granted stock-market access to many young retail traders. When the meme phenomenon began in 2021, it suddenly gained many new customers.

But meme investors just didn't latch onto HOOD stock. Since its IPO, Robinhood shares have dropped more than 45%.

A lot of the bearishness is due to a handful of factors that have thrown cold water on HOOD investors — including failures to grow, fierce competition, and a loss of customers — along with macroeconomic headwinds such as uncertainties caused by the threat of interest rate hikes.

2. ContextLogic

ContextLogic  (WISH) - Get ContextLogic, Inc. Class A Report operates e-commerce platform Wish. The company was founded in 2010 and has been publicly traded since December 2020. It has also been a constant topic of discussion on Reddit forums throughout the year.

The stock peaked nearly 30% in the first few months after its IPO. But since then, even with some popularity hype, it has fallen nearly 90% since its historical peak.

Wish's business has suffered since the COVID-related e-commerce tailwinds started dying out. Market reaction to the company's recent financial results has been negative. This bearishness has been driven by concerns about how the company might handle the recovery in the midst of a CEO change.

However, Wall Street has set an average price target for WISH at $4.92, suggesting a 37% upside ahead. ContextLogic will need to make a pretty big turnaround to hit that level.

3. Clover Health

Tennessee-based Clover Health  (CLOV) - Get Clover Health Investments, Corp. Class A Report, an American Medicare Advantage insurer, gained broad market attention this year after the "king of SPACs," Chamath Palihapitya, backed it.

But Clover's share price has plummeted this year. The likely culprit? Research firm Hindenburg released a scathing exposé of the stock, claiming the company was the target of a Department of Justice investigation into its business model and sales practices.

After Hindenburg's report, CLOV's stock price dropped 50% by the end of May. At that point, the stock caught the attention of major Reddit discussion forums and became a new target of meme mania. Starting in the beginning of June, the stock rose 190% and then dropped about 80% after peaking.

Since the June peak, CLOV has become a favorite of meme stock fans, with a very active sub-Reddit community of more than 47,000. However, many analysts argue that this isn't a meme stock, since Clover has a growth profile and an innovative business model.

Still, faithful CLOV investors believe it could become a “blue chip” meme stock on the same level as AMC or GME and trade according to popularity and not necessarily fundamentals. But this year, they've been unluckily disappointed by Clover's stock performance.

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The 3 meme stocks below disappointed long traders and investors in 2021. Of these, which do you think has the best chance of bouncing higher in the new year? Leave your opinion below!