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Why Zomedica, Naked Brand, Ocugen, and Other Reddit Stocks Crashed Today

By Joe Tenebruso - May 4, 2021 at 7:53PM

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Traders appear to be rotating out of these former highfliers.

What happened

After soaring earlier in the year, several stocks that have become favorites among investors on Reddit and other social media sites have pulled back sharply in recent days.

Here's how some of the most popular of these stocks performed today:

  • Zomedica (ZOM -0.27%), down 6%
  • Naked Brand Group (NAKD), down 8%
  • Ocugen (OCGN 0.44%), down 20%

So what

Millions of investors have turned to investment forums such as the WallStreetBets Reddit group in search of ways to make money in the current market environment. After some traders made a fortune by buying shares of GameStop early into its epic Reddit-fueled short squeeze, investors began searching for other volatile stocks to buy. Many of these traders turned to small-cap stocks like Naked Brand, Zomedica, and Ocugen in hopes of mimicking GameStop's explosive returns.

A person is pointing to a stock chart that rises sharply and then falls.

Image source: Getty Images.

For investors who bought these stocks early in the year, this has been a winning strategy. Ocugen, Zomedica, and Naked Brand are up 587%, 290%, and 207%, respectively, so far in 2021.

OCGN Chart

OCGN data by YCharts

However, some investors apparently decided to take their winnings off the table today, and all three stocks are now down sharply from their highs of the year.

Now what

CNBC reported today that many retail investors appear to be shifting out of individual stocks and into exchange-traded funds (ETFs). This dynamic could be partly responsible for the recent downturn in the prices of many previously popular Reddit stocks.

Another reason may be the massive surge in trading in cryptocurrencies such as Ethereum (ETH 2.40%) and Dogecoin (DOGE 3.55%). Ethereum recently hit new all-time highs above $3,000, and Dogecoin's price surged 30% today alone. Traders may be leaving the stock market and turning to the crypto arena in hopes of achieving even quicker gains.

Regardless of what they're buying, one thing is clear: Many investors chose to sell their formerly high-flying Reddit stocks today.

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Stocks Mentioned

Dogecoin Stock Quote
$0.07 (3.55%) $0.00
Naked Brand Group Limited Stock Quote
Naked Brand Group Limited
Ocugen, Inc. Stock Quote
Ocugen, Inc.
$2.27 (0.44%) $0.01
Zomedica Pharmaceuticals Corp. Stock Quote
Zomedica Pharmaceuticals Corp.
$0.22 (-0.27%) $0.00
Ethereum Stock Quote
$1,075.79 (2.40%) $25.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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