The Major Trend that Outperformed the S&P by 5x
They say hindsight is 20/20.
When we look back, our biggest misses (and strokes of genius) look so glaringly obvious, they smack us in the face.
How could we not have seen that coming?
As an investor, this can be maddening.
But I want to share a secret with you.
When it comes to spotting major winners way ahead of Wall Street, I cheat a little.
Well, I guess it’s not cheating…
I use LikeFolio’s real-time consumer insights to understand how consumer behavior is changing.
Spotting and researching these big-picture macro trends as they are unfolding is quite literally in my job title.
And as we kick off 2022, I want to share some behind-the-scenes info about how this process works, and how it helped us book major gains in 2021.
Then (as a late Christmas gift, maybe?), I’ll preview a trend or two that our data suggests is just getting started.
The Biggest Consumer Trends in 2021
The first step to spotting major consumer trends is pretty simple — listen to what consumers are talking about.
At LikeFolio we do this at scale, processing 3 million to 5 million tweets every day.
Seriously, that’s a LOT of organic consumer conversations.
I’d compare this to listening to topics of conversation at the dinner table. If suddenly a common theme begins emerging among different groups of people that wasn’t there before, you may be on to something.
Now imagine you can do this at scale.
At LikeFolio, that’s precisely what we do. We systematically measure repeating themes in the mentions we analyze. Then we chart these occurrences over time.
The visual element really makes these shifts pop. Here were the top three trends in 2021:
Chip Shortage Fallout
Prior to 2021, social media mentions of “chip shortages” were pretty much non-existent.
In fact, I’m not sure most consumers even knew what “chips” were. But this year, supply chain constraints began to have real-life ripple effects on consumers.
Products in high demand (like electronics and vehicles) were out of stock, and the wait time was growing.
You can see the moment this became real for consumers on the chart below.
By August, chip shortages were regular dinner table conversation.
But at LikeFolio, we were already on to this. We issued a Chip Shortage Fallout MegaTrends report in June.
Shares for one company featured on this report, Avis (CAR), have gained by as much as +230% since then!
Since the date of the Chip Shortage MegaTrends report release, the average return for all five stocks featured on the report is +41%. The S&P is up +8% in the same time frame.
That’s a huge discrepancy. And a serious edge.
Buy Now, Pay Later
2020 changed the way consumers conducted business. Because of COVID-19, e-commerce was everything and curbside pickup options that allowed shoppers to elude in-store trips soared in usage.
But in 2021, it was different.
The way consumers managed their finances and purchases changed.
Instead of racking up credit card debt and paying interest, consumers opted for a new payment mechanism: Buy Now, Pay Later (BNPL).
By April 2021, consumer mentions of using a zero-interest loan service to complete a purchase on regular items had increased by 21% versus 2019 levels.
At the exact same time, consumers were talking about cancelling credit cards at a higher clip and maxing out credit cards at a much lower clip.
A serious behavior change was underway.
And it was clear there was a leader in the space: Affirm (AFRM).
On April 30, LikeFolio issued a Bullish alert for the payment service.
Since then, shares have gained by as much as +130%!
The Metaverse
Lastly, it wouldn’t be 2021 if we didn’t talk about the metaverse.
LikeFolio data helped to spot a major metaverse winner WAY ahead of Wall Street — and we’re not talking about Facebook!
Check out mentions of the metaverse in May. Yes, May, of 2021.
The number of discussions surrounding the new, virtual metaverse had increased by more than +500% YoY!
The name on the tip of many consumer tongues?
Roblox.
The gaming platform was new to the market, but not to consumers. Mentions of signing up for and playing Roblox were soaring.
LikeFolio featured the company on a May MegaTrends report, citing its metaverse vision as a driver of potential growth.
We really nailed that one.
Shares have traded higher than +110% since we sent that report.
Two Major Trends Ahead in 2022…
So as you can see, hindsight is a great tool.
But the ability to spot major changes in consumer behavior as they are happening is even better!
Luckily at LikeFolio, our process never stops.
And two trends are seriously taking off right now.
Electric vehicle demand is skyrocketing…
And so is digital wallet usage.
In fact, we’ve already featured 10 big potential winners from each of these trend shifts in two member reports.
We’ll take foresight over hindsight any day!
Megan Brantley
Head of Research, LikeFolio