Today I found an old investment folder with recommendations of the Motley Fool 10x Discovery Service from when I was subscribed to their “All Access” pass that cost about $7000 (mid-2020 to mid-2021). Despite the hype about outperforming the market, the Fool’s recommendations performed poorly for me and I discontinued the service.
To see what I had “missed out” on if I had held for the several-year timeline they recommend, I referenced the price of each stock at a midpoint in my subscription (arbitrarily selected at Jan 4 or 5, 2021) and today (July 26, 2024). Here are the results.
| Stock | Jan 4 or 5, 2021 | Jul 26, 2024 | Return |
|---|---|---|---|
| Atlassian (NASDAQ: TEAM) | $ 233.38 | $177.32 | -24.02% |
| Danimer Scientific (NYSE: DNMR) | $ 22.41 | $0.52 | -97.68% |
| DermTech Inc. (NASDAQ: DMTK) | $ 31.97 | bankrupt | -100.00% |
| Invitae (NYSE: NVTA) | $ 45.54 | bankrupt | -100.00% |
| Kahoot (OB: KAHOT) | $ 11.50 | $3.60 | -68.70% |
| Kinsale Capital Group (NASDAQ: KNSL) | $ 199.59 | $443 | 122.10% |
| Live Oak Bancshares (NASDAQ: LOB) | $ 45.53 | $45.66 | 0.29% |
| Piedmont Lithium (PLL) | $ 32.25 | $10.67 | -66.91% |
| Social Capital Hedosophia Holdings Corp. IV (NYSE: IPOD) | $11 or $12? | $10 (closed in 2022) | small loss |
| Schrödinger, Inc. (NASDAQ: SDGR) | $ 82.66 | $22.42 | -72.88% |
| Adyen N.V. (OTC: ADYE.Y) | $ 20.95 | $11.76 | -43.87% |
| Boston Omaha Corporation (NASDAQ: BOMN) | $ 27.29 | $14.74 | -45.99% |
| COMPASS Pathways Plc (NASDAQ: CMPS) | $ 43.60 | $8.03 | -81.58% |
| CuriosityStream Inc. (NASDAQ: CURI) | $ 16.45 | $1.12 | -93.19% |
| Fiverr International (NYSE: FVRR) | $ 214.43 | $22.72 | -89.40% |
| Opendoor Technologies Inc. (NASDAQ: OPEN) | $ 25.60 | $2.52 | -90.16% |
| Shopify (NYSE: SHOP) | $ 111.87 | $59.94 | -46.42% |
| Social Capital Hedosophia Holdings Corp. V (SoFi) (NYSE: IPOE) | $ 12.15 | $10 (closed in 2022) | -17.70% |
| Walker & Dunlop (NYSE: WD) | $ 88.86 | $108.35 | 21.93% |
| Zscaler (NASDAQ: ZS) | $ 193.48 | $181.36 | -6.26% |
| Appian (NASDAQ: APPN) | $ 149.80 | $37.75 | -74.80% |
| Bitcoin (CRYPTO: BTC) | $ 33,987.74 | $67,959.47 | 99.95% |
| CRISPR Therapeutics (NASDAQ: CRSP) | $ 160.62 | $50.92 | -68.30% |
| CrowdStrike Holdings, Inc. (NASDAQ: CRWD) | $ 211.82 | $256.16 | 20.93% |
| Etsy (NASDAQ: ETSY) | $ 174.98 | $62.27 | -64.41% |
| Fulgent Genetics (NASDAQ: FLGT) | $ 63.65 | $23.66 | -62.83% |
| Lemonade, Inc. (NYSE: LMND) | $ 122.00 | $23.42 | -80.80% |
| Pinterest (NYSE: PINS) | $ 68.42 | $37.55 | -45.12% |
| Skillz, Inc.(NYSE: SKLZ) | $ 364.00 | $6.44 | -98.23% |
| Zoom Video Communications (NASDAQ: ZM) | $ 360.83 | $60.09 | -83.35% |
I was not able to find an exact price for Hedosophia IV (IPOD) in Jan 2021 as it shuttered in 2022, but it was also for a loss compared to the recommended price.
Motley Fool 10x Discovery: -50.25% average return for the other 29 recommendations over this period.
S&P 500: 45.65% return (3,748.14 to 5,459.1)
NASDAQ: 36.69% return (12,698.45 to 17,357.88)
Motley Fool 10x Discovery vs. S&P 500: -92.45%
Motley Fool 10x Discovery vs NASDAQ: -83.50%
Out of the 30 Motley Fool 10x Discovery recommendations, only 5 did not lose money. 10 recommendations lost 80% or more, with 3 falling to zero. Despite the claim of the “10x Discovery Service” to identify putative future “ten-baggers,” none of the stocks approached this return. At 18-22% inflation since January 2021, three of the five non-loss positions lost ground or were stagnant in inflation-adjusted returns (Live Oak Bankshare 0.29% return, CrowdStrike 20.93%, and Walker Dunlop at 21.93%). Only two had positive inflation-adjusted returns: Bitcoin (99.95%) and Kinsale Capital Group (122.1%).
The Fool’s 30 recommendations were overwhelmingly cash flow negative stocks with poor fundamentals. Nonetheless, their various services doubled down, for instance recommending Fiverr (FVRR) three times at over $200 within a four-month period. It sells for $22.72 today. While these recommendations did not discover any 10x returns, they did discover 1/10th returns. Lemonade (LMND) was another repeat recommendation across multiple Motley Fool services. It has fallen over 80% and continues to lose over $200 million annually with no clear path to profitability.
The Motley Fool’s comparisons of their claimed returns to the S&P 500 are misleading, as their recommendations here are overwhelmingly high-risk tech companies with poor fundamentals. Even the NASDAQ is not a good comparison as the latter is weighted towards larger, more stable and financially successful firms. Such comparisons also do not consider the that the “risk premium” of the Fool's highly speculative recommendations demands significantly higher returns to justify the risk. The proper peer group is (mostly speculative, mostly tech) cash-flow negative small-cap growth stocks.
The results do not support the Motley Fool's claims of outperformance for their 10x Discovery service. Different dates can be referenced for stock prices during my subscription period (mid 2020-mid-2021) with substantially similar results.
Many of these recommendations are recycled among their various services. It is also my belief from these data and personal experience as an investor who bought virtually every recommendation across multiple premium services of the Motley Fool that their other services also widely underperformed the market during this period.
Disclosures: I have small open positions on Zoom (ZM) and Bitcoin initiated earlier this year, but none related to my prior Motley Fool membership. I have no plans to initiate a position in any of the securities listed above in the next month.
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