Beyond GameStop: Reddit’s WallStreetBets is Now Targeting These 10 Stocks
In this article, we discuss the 10 stocks Reddit's WallStreetBets is now targeting. If you want to skip our detailed analysis of these stocks, go directly to Beyond GameStop: Reddit's WallStreetBets is Now Targeting These 5 Stocks.
Retail investors have been exercising ever greater influence on the overall market dynamics the past few months, as the record stock rallies of GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) have demonstrated. However, as their influence increases, so does the list of stocks that gain from this influence. The most popular platform where these retail investors exchange ideas is the Reddit forum WallStreetBets. The forum has more than 10.6 million members and is one of the hottest online places in finance.
Some of the stocks presently popular on WallStreetBets include Alibaba Group Holding Limited (NYSE: BABA), Virgin Galactic Holdings, Inc. (NYSE: SPCE), and MicroVision, Inc. (NASDAQ: MVIS). Interestingly, the theory that stocks increase in value along with the number of mentions on this forum has been steadily gaining traction. In June, Financial Times reported that hedge funds were keeping track of stock mentions on Reddit after record losses in the GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) short squeeze.
One reason why institutional investors are monitoring these forums is the meme stocks - firms with little to offer in terms of earnings or growth but rally on the back of retail investor interest - that are often the subject of short-selling attempts. As retail investors initiate short squeezes, there is a danger of repeating the mistakes made during the GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) saga in January that led to billions of dollars in losses to big finance and even led to the closure of some hedge funds.
Decline in Meme Stocks
Even though retail investors have had the upper hand in this meme stock battle with hedge funds, there are early signs of these meme stocks running out of steam. News agency Reuters reports that GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings, Inc. (NYSE: AMC) have both fallen to half their peak value reached early last month. Both stocks have registered four straight days of losses. GameStop Corp. (NYSE: GME) is now trading at $167 while AMC Entertainment Holdings, Inc. (NYSE: AMC) was around $33, compared to June highs of $344 and $72.
In recent weeks, there has also been increased interest around other internet platforms where retail investors gather to exchange ideas, like StockTwits and Robinhood. The former is a social media platform for stock traders and the latter is a trading application that is poised to go public at a $40 billion valuation soon. Adding fuel to this drop in popularity of WallStreetBets forum is that it has gone private, with moderators now in charge of approving access to new users after the forum came under heavy fire from institutional investors for promoting meme stocks.
However, the forum still exercises great influence in retail investor circles that is not going to be easy to diminish. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Adam Nowakowski on Unsplash
With this context in mind, here is our list of the 10 stocks Reddit's WallStreetBets is now targeting. These were ranked keeping in mind the number of mentions on Reddit, basic business fundamentals, and hedge fund sentiment around each.
Reddit's WallStreetBets Is Now Targeting These Stocks
10. SoFi Technologies, Inc. (NASDAQ: SOFI)
Number of Hedge Fund Holders: N/A
SoFi Technologies, Inc. (NASDAQ: SOFI) is placed tenth on our list of 10 stocks Reddit's WallStreetBets is now targeting. The stock has returned 22% to investors over the past year. The company markets digital financial services. On June 1, the stock was initiated at Outperform by Oppenheimer, which noted the uniqueness of the consumer focused fintech platform of the firm. The share price of the firm has been soaring as interest in fintech continues to grow, with investment bank JP Morgan signing its third fintech deal in a year in June.
On June 28, investment advisory Rosenblatt maintained a Buy rating on SoFi Technologies, Inc. (NASDAQ: SOFI) stock with a price target of $30. Sean Horgan, an analyst at the firm, told investors that it was a unique opportunity to buy the stock at the present price.
SoFi Technologies, Inc. (NASDAQ: SOFI) debuted on the stock last month through a merger with a special purpose acquisition company. The company has a market capitalization of over $12 billion, making it one of the most lucrative fintech firms in the US.
Just like Alibaba Group Holding Limited (NYSE: BABA), Virgin Galactic Holdings, Inc. (NYSE: SPCE), and MicroVision, Inc. (NASDAQ: MVIS), SoFi Technologies, Inc. (NASDAQ: SOFI) is one of the stocks Reddit's WallStreetBets is now targeting.
9. Newegg Commerce, Inc. (NASDAQ: NEGG)
Number of Hedge Fund Holders: N/A
Newegg Commerce, Inc. (NASDAQ: NEGG) is an online retailer based in California. It is ranked ninth on our list of 10 stocks Reddit's WallStreetBets is now targeting. The company’s shares have returned 547% to investors over the past twelve months. On July 6, after the online platform of the company displayed four hard-to-get NVIDIA units, the share price jumped more than 38%, largely driven by chatter around the topic on internet forums like Reddit. NVIDIA GPUs are hard to find these days amid a boom in crypto mining and gaming stocks.
On July 12, investment advice company Fintel identified Newegg Commerce, Inc. (NASDAQ: NEGG) stock as a notable short squeeze. The share price of the firm has soared by over 300% in the past seven days amid interest on Reddit forums.
Newegg Commerce, Inc. (NASDAQ: NEGG) is also one of the most volatile on the market, with the share price rising and falling in tandem with interest on social platforms, with little in terms of business fundamentals guiding this process.
Newegg Commerce, Inc. (NASDAQ: NEGG) is now a top stock on WallStreetBets, just like Alibaba Group Holding Limited (NYSE: BABA), Virgin Galactic Holdings, Inc. (NYSE: SPCE), and MicroVision, Inc. (NASDAQ: MVIS).
8. DiDi Global Inc. (NYSE: DIDI)
Number of Hedge Fund Holders: N/A
DiDi Global Inc. (NYSE: DIDI) is a Chinese mobility technology platform. It is placed eighth on our list of 10 stocks Reddit's WallStreetBets is now targeting. The company only recently debuted on the stock market in the United States. The firm raised more than $4.4 billion from the initial offering, fetching a valuation of close to $73 billion on a fully diluted basis. The company has since come under regulatory pressure from authorities in China that are cracking down on dual listed firms.
DiDi Global Inc. (NYSE: DIDI), often called the Uber of China, has not had a good week. On July 16, the Chinese government announced it was conducting cybersecurity reviews at the offices of the firm. However, Reddit mentions have helped the stock manage this bad news.
DiDi Global Inc. (NYSE: DIDI) has also been hit by the removal of its app from stores in China, as the government pursues an antitrust investigation into the firm. The company has already clarified that revenue may take a hit because of the pressures.
Alongside Alibaba Group Holding Limited (NYSE: BABA), Virgin Galactic Holdings, Inc. (NYSE: SPCE), and MicroVision, Inc. (NASDAQ: MVIS), DiDi Global Inc. (NYSE: DIDI) is among stocks Reddit's WallStreetBets is now targeting.
7. Marin Software Incorporated (NASDAQ: MRIN)
Number of Hedge Fund Holders: 2
Marin Software Incorporated (NASDAQ: MRIN) is ranked seventh on our list of 10 stocks Reddit's WallStreetBets is now targeting. The company’s shares have offered investors returns exceeding 505% over the course of the past year. The firm operates as a digital marketing agency. In earnings results for the first quarter, reported in May, the firm posted a quarterly revenue of around $6.3 million and earnings per share of -$0.45. The firm has a market capitalization of close to $100 million.
Marin Software Incorporated (NASDAQ: MRIN) stock has been soaring amid Reddit interest. On June 29, it surged 55% in a single day of trading after mentions on WallStreetBets. Earlier, on June 24, the stock surged 65% after the firm announced it was integrating the Instacart Ads into the Marine One platform.
At the end of the first quarter of 2021, 2 hedge funds in the database of Insider Monkey held stakes worth $818,000 in Marin Software Incorporated (NASDAQ: MRIN), down from 3 in the previous quarter worth $1.1 million.
Marin Software Incorporated (NASDAQ: MRIN) is gaining traction on WallStreetBets, where stocks like Alibaba Group Holding Limited (NYSE: BABA), Virgin Galactic Holdings, Inc. (NYSE: SPCE), and MicroVision, Inc. (NASDAQ: MVIS) are already popular.
6. Carver Bancorp, Inc. (NASDAQ: CARV)
Number of Hedge Fund Holders: 2
Carver Bancorp, Inc. (NASDAQ: CARV) stock has offered investors returns exceeding 180% over the course of the past twelve months. It is placed sixth on our list of 10 stocks Reddit's WallStreetBets is now targeting. The firm provides banking services and is headquartered in New York. On July 9, the share price of the firm registered a 23% increase in a single day after mentions of the firm on StockTwits, a social media platform where investors and traders exchange ideas on the marketplace.
On July 8, news publication Bloomberg reported that Carver Bancorp, Inc. (NASDAQ: CARV) was a short squeeze opportunity as the stock was soaring amid social media chatter and a high short-interest, revealing that short interest as a percentage of the equity float at the firm had increased to 76% from about 20% in May.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Carver Bancorp, Inc. (NASDAQ: CARV) with 27,769 shares worth around $225,000.
Carver Bancorp, Inc. (NASDAQ: CARV) has become one of the favorite stocks of users on WallStreetBets, who already recommend Alibaba Group Holding Limited (NYSE: BABA), Virgin Galactic Holdings, Inc. (NYSE: SPCE), and MicroVision, Inc. (NASDAQ: MVIS).
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Disclose. None. Beyond GameStop: Reddit's WallStreetBets is Now Targeting These 10 Stocks is originally published on Insider Monkey.