This one year has been full of uncertainty, and it has led to recordbreaking instability on Wall Street. Although things may now appear relatively quiet, broad-based S&P 500 March saw its fastest bear-market registration ever, and the index has entered its 10 largest single-session point declines in history since the start of the year.
While these changes in the wild stock market have been futile for some, they have proved to be a lure for millennials and novice investors. We know this because Robinhood, an investing online investment app, added millions of new members in 2020, and the average age of its user base is just 31.
Still, it’s great to see young investors paying money in the stock market, many Robinhood users have chosen to chase penny stocks or are bad companies. As a result, some of the most popular Robinhood stocks by Wall Street are hated. This was especially evident during the third quarter, with money managers preparing to exit the following three stocks.
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Tesla
Electric Vehicle (EV) Manufacturer Tesla Motors (Nasdaq: TSLA) The last decade has been virtually preventable. CEO Elon Musk has successfully built the first auto company from land to mass production in more than five decades, and shareholders have gained nearly 7,800% over a 10-year period.
However, optimism around Tesla and its high valuations seems to be waning among professional finance managers. During the third quarter, overall ownership by Form 13F filers fell by 18.2% or more than 87 million shares.
If you’re wondering why professional finance managers are no longer interested in Tesla, I’ll take a look at the company’s revenue statement. Funding is no longer a concern, the real issue is Tesla’s full year of generally accepted accounting principles (GAAP) inability to generate profit, and its reliance on the sale of emissions credits to generate revenue. In other words, Tesla is not profitable without the help of (legal) accounting tactics. With a market cap north of 500 500 billion for a company that has the potential to generate old-fashioned profits, some people may think twice about mashing acceleration on a floorboard they know.
It is also unclear whether Tesla’s first-mover benefits will be sustainable in the long run. Other brand-name auto tow stocks invest billions annually in EV and / or autonomous driving solutions. From style to battery technology, its U.S. EV dominance can be difficult to maintain for a long time.
Image Source: American Airlines.
American Airlines Group
Another exceptionally popular Robinhood stock J&K Wall Street finance managers opened the door in the third quarter. American Airlines Group (Nasdaq: AAL). Delayed airline stock fell 5.3% or 15.1 million shares of total 13F ownership in Q3.
While Tesla is replacing gravity with its innovation, the old-school airline industry remains largely middle-aged, with American Airlines, the bunch feeling the worst. This is a company that decided to modernize its fleet in 2018 and retire dozens of commercial aircraft before their useful lifespan ends. As a result, American Airlines’ balance sheet was repaid.
The company’s poor economic flexibility was only exacerbated by the COVID-19 epidemic. Beneath the air traffic, where the year started was down and there is no clear timeline as to when people will go to the skies, this high-capital-input, low-term industry hangs on the thread and suffers huge losses. Process. The industry is simply not able to navigate through the extended economic downturn.
The money managers who are fleeing are a nearly 33 33 billion net company that defers all dividends and share buybacks. Even if American Airlines avoids bankruptcy, it will be stuck in debt for many years to come.
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Intel
Wall Street money managers have also hired brand-name chipmakers Intel (Nasdaq: INTC). Despite the shares being popular among millennial investors, 13F Philers dropped about 159 million shares, or 5.8%, in their successive quarterly holdings in Intel in the third quarter.
Like American Airlines, the COVID-19 has indeed made a number on Intel’s flagship operating segments. Although it has seen very modest growth from personal computing and workstation chip demand, its data center group’s revenue has stumbled badly (down 10% from the previous year’s quarter). Advanced micro devices, And expect more modest order growth from cloud service providers does not sit well with Wall Street.
Yet unlike Tesla, which does not have a proven, time-tested business model, and American Airlines, whose business model model is slightly disrupted by economic headwinds, Intel has shown the ability to remain highly profitable in adverse economic conditions. Intel is investing heavily in its future, with the company expected to grow dramatically from its high-margin data center segment in the coming years. The Memory and Programmable Solutions division also offers reasonable long-term growth potential.
Even so, Intel has been disappointing in 2020 and its high growth days are long gone, now its price is about 10 times Wall Street’s earnings per share forecast for 2021. When combined with close yields it is a fair valuation. %. Assuming Intel’s growth strategy axis starts to pay off by the mid-decade, this is a Robinhood stock sorry to sell behind Wall Street.
