10 Stocks That Disappointed in 2021

2021 has been good year for investors overall. All three major indexes are having above-average years, with the S&P 500 up 25% year to date. However, not every stock has been a winner. Some COVID-19 winners have gotten hammered by the recovery, while other promising growth stories have fizzled out. Keep reading to see 10 stocks that have disappointed the market this year.

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Stitch Fix (NASDAQ: SFIX) had long looked like a promising disruptor in apparel retail, using a data science model to recommend clothes to its customers.

For a while, that approach drove steady growth, with revenue regularly increasing around 20%. However, in 2021, CEO Katrina Lake stepped down from her leadership post right ahead of the launch of its Freestyle offering, which makes clothes available for direct shopping rather than the company's conventional Fix model.

In its recent earnings report, the company's hopes of being a disruptor seemed to be dashed as management called for revenue growth of just flat to 3% in the current quarter and a sequential decline in active customers. Not surprisingly, the stock plunged 22% on the news, and it's now down 67% year to date.

Stitch Fix clearly has a lot of work to do to return the company to growth.

ALSO READ: Why Stitch Fix Could Still Be a Ten-Bagger

A number of pandemic winners wilted this year, but Peloton Interactive's (NASDAQ: PTON) slide was particularly dramatic, as the brakes slammed on the company's growth in its most recent quarter.

Revenue grew just 6% as the number of bikes and treadmills it sold fell from the quarter a year ago. Even worse, management had not anticipated such a deceleration as spending on sales and marketing more than doubled in the quarter. As a result, the company posted a wide loss and slashed its guidance for the full year significantly.

While Peloton's membership continues to grow, the growth story is clearly not as potent as it was during the early pandemic days, and the company is going to have to scale back on those marketing investments. Year to date, the stock is now down 70%.

Chinese stocks have had a rough year in general as the Chinese government has tightened regulations on tech companies, forcing divestitures, delistings, IPOs being blocked, and in the case of tutoring stocks, forcing them to become nonprofits.

While dozens of Chinese stocks have taken a hit this year, possibly none has lost more in market value than Alibaba Group Holding (NYSE: BABA), the e-commerce giant that has been something of a whipping boy for the Chinese government this year. Antitrust regulators fined the company $2.8 billion in April; it's been ordered to sell off some of its media businesses, and its financial sister company, Ant Group, was prevented from going public late last year after founder Jack Ma made critical comments toward finance ministers.

Weak revenue growth in its recent earnings report also didn't help. While the company is still a profit machine, the stock is now down 46% this year.

Zoom Video Communications (NASDAQ: ZM) was arguably the biggest winner of the pandemic as the videoconferencing platform became an essential utility during the crisis and its revenue grew by more than 300% for much of 2020.

While Zoom has continued to execute in 2021, the stock has come back from stratospheric heights, falling 42% as investors have adjusted their expectations to the current reality in which Zoom is growing at a much more normalized rate.

For the current quarter, the company guided to just high-teens revenue growth, and analysts expect a similar pace next year. At this point, it's clear that the pandemic-fueled, triple-digit revenue growth has come to a close.

ALSO READ: Zoom Stock Plunged. Is This a Buying Opportunity?

Vroom (NASDAQ: VRM), an online used car seller, seemed to time its IPO perfectly. The company went public in June 2020, just as the car market was rebounding from the lockdown period, and car prices have remained strong since then due to high demand and a semiconductor shortage that's affected production.

However, Vroom has struggled to take advantage of the current tailwind, and while revenue growth has been strong, investors seem to think the company is overpaying for its inventory. Growth in e-commerce gross profit trailed behind growth in e-commerce revenue in its most recent quarter, showing the business is not scaling as expected, and the company's losses are expanding rapidly as well.

Given that, it's not surprising that the stock has fallen 67% this year, badly underperforming sector leader Carvana, which is up 12% year to date.

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We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Like some other stocks on this list, Teladoc Health (NYSE: TDOC) was a pandemic winner as revenue at the telehealth company soared during the crisis when patients and doctors responded by taking healthcare visits online.

But this year, skepticism for the company's prospects has mounted as it seems to have overpaid for its $18 billion acquisition last year of Livongo Health, a chronic disease monitoring company, and Teladoc is still putting up wide losses.

In the third quarter, revenue jumped 81% to $522 million, though much of that was driven by acquisitions. It also lost $67.3 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). And it saw just 2% growth in U.S. paid membership to 52.5 million, showing some headwinds.

While the company is a leader in the space, there are some real questions about whether it has a competitive advantage and if it can be profitable. As a result, the stock is down 49% year to date.

Jumia Technologies (NYSE: JMIA) has been dubbed the Amazon of Africa by some investors, and while the company may be the leading e-commerce company on that continent, its recent results are hardly Amazonian.

Year to date, the company's revenue is up just 5.3% to $115.9 million, and its adjusted EBITDA loss has increased by 24% to $126.7 million. Those numbers indicate that the company's efforts to shift the business from big-ticket items like electronics and appliances to fast-moving consumer goods has not yet paid off.

As a result, after a boom year in 2020, the stock is down 63% year to date in 2021, and that decline feels warranted.

ALSO READ: 3 Top E-Commerce Stocks to Buy in December

Pinterest (NYSE: PINS) is yet another pandemic winner whose star has faded this year. The image-based discovery engine was a big winner in 2020 as users flocked to the platform as an escape from the boredom of the social distancing era and as screen time rose broadly. However, 2021 has seen the opposite effect take place, and Pinterest's user base has actually declined over the past two quarters.

Year to date, the stock is now down 38%, but Pinterest is in a better position than some of its fellow fallen pandemic angels as revenue growth is strong, it still has a lot of room for monetization, and the user decline appears to be bottoming out, according to comments on the most recent earnings call.

Upstart insurance company Lemonade (NYSE: LMND) has also seen its stock wilt this year, with shares down 59%.

Lemonade's misfortune seems to be less of its own making and more the dwindling of the market euphoria that drove the stock to more than triple following its IPO in July 2020.

The company, which targets millennials with an AI-driven model that provides instant quotes and claims assistance, is still growing fast with revenue doubling to $35.7 million. But the stock is expensive at a price-to-sales ratio of 28, and Lemonade is still far from being profitable. Still, the company has disruptive potential, especially after its acquisition of Metromile, which paves the way for its entry into auto insurance.

Zillow Group (NASDAQ: Z) (NASDAQ: ZG) isn't the worst-performing stock of the year, but the real estate tech company may have produced the most memorable gaffe of the year.

In its third-quarter earnings report, Zillow said it would pull the plug on Zillow Offers, its iBuying or home-flipping program, in which the company gave instant offers to homeowners based on its proprietary algorithms. Zillow reversed itself just three months after talking up the iBuying program as it lost more than $400 million in just the third quarter by overpaying for the homes it purchased.

That's one reason why the stock is down 50% year to date, but a cooling in the real estate boom has also contributed to the pullback.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

While not all of these stocks are worth buying at these prices, it's worth looking through this list and seeking out other stocks that are down sharply for some end-of-the-year bargains.

It's best to avoid stocks that are down because their growth stories have broken, like Stitch Fix, Peloton, and Zillow. Instead, focus on stocks that are down for short-term reasons or because market sentiment has changed, like Pinterest, Zoom, and Lemonade.

With the pandemic recovery ongoing and the Federal Reserve likely to tighten its monetary policy, 2022 is likely to bring a shift in stock market winners and losers. Some of this year's winners may even find themselves on this list in another year.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman owns Alibaba Group Holding Ltd., Amazon, Lemonade, Inc., Pinterest, Stitch Fix, Teladoc Health, Vroom, Inc., and Zoom Video Communications. The Motley Fool owns and recommends Amazon, Carvana Co., Jumia Technologies AG - ADR, Lemonade, Inc., Peloton Interactive, Pinterest, Stitch Fix, Teladoc Health, Zillow Group (A shares), Zillow Group (C shares), and Zoom Video Communications. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.