Exactly 3 years ago, there was a thread shared on X (back then Twitter) – “Top 20 stocks that have 50x potential”.
This list was based on 700+ responses from other Twitter users, and I thought it was a solid representation of what the average investor was excited about, back then. So, I bookmarked the thread, and here we are, three years later, ready to have a look at the wisdom (or stupidity) of the investment crowd.
But before I start, do not forget, that the sentiment at that time was very positive. The S&P500 was up over 90% in a bit over a year, since the pandemic low back in March 2020.
| Company name | How it was described | Ticker | % change |
|---|---|---|---|
| Alteryx | Big Data Analytics | AYX | -39% |
| Boston Omaha | Berkshire Hathaway 2.0 | BOMN | 6% |
| Beyond meat | Plant-based meat | BYND | -95% |
| Desktop Metals | 3D Printing | DM | -95% |
| ContextLogic | Discount e-commerce | WISH | -98% |
| Fiverr | Online freelance marketplace | FVRR | -90% |
| Global-E | Software for internatiocal e-commerce | GLBE | -38% |
| Jumia | E-commerce in Africa | JMIA | -47% |
| Lemonade | Next-gen insurance | LMND | -74% |
| Upstart | Credit scores 2.0 | UPST | -76% |
| Latch | Hardware/software for property management | LTCH | -97% |
| Nano-X Imaging | Bring medical imaging to the world | NNOX | -71% |
| Origin Materials | Carbon negative plastic | ORGN | -85% |
| Open Door | Real estate iBuying | OPEN | -82% |
| Sofi Technologies | Digital financial services | SOFI | -50% |
| Redfin | Real Estate 2.0 & iBuying | RDFN | -86% |
| Ozon | e-Commerce in Russia | Ozon | Delisted |
| Virgin Galactic | Space tourism | SPCE | -99% |
| Twist Biosciences | DNA on demand | TWST | -56% |
| YETI | High-quality outdoor gear | YETI | -57% |
| Average | -70% | ||
| S&P500 | 28% |
The table shows the performance of these “top 20 stocks that have 50x potential” and as you can see, the average decline was a staggering 70%, compared to the S&P500’s gain of 28% over the same period. Not only that, but all of the 20 stocks underperformed the index.
The reality is, that it is easy to look like a genius in a bull market. Positive sentiment drives stock prices up, and it hides the underlying weaknesses. The fear of missing out adds more fuel to the fire. But also, there was fuel in the form of stimulus checks.
However, this doesn’t last forever and market conditions change. When that happens, risky investments and poor strategies are exposed, and those following the crowd without doing their homework, eventually learn a harsh lesson, as we’ll see in this perfect example.
The dramatic decline in these stocks serves as a cautionary tale about the dangers of following the crowd in investing. Despite the initial optimism and promising potential, the reality has been a harsh lesson in the importance of thorough research. As Warren Buffett said, only when the tide goes out do you discover who has been swimming naked.
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