The WallStreetBets subreddit is buying these stocks.
The members of the WallStreetBets community on Reddit — which reportedly has grown by more than 2 million this week to upward of 4.5 million members — have brought Wall Street to its knees. WallStreetBets describes itself as “like 4chan found a Bloomberg terminal illness,” and it represents total Wall Street counterculture. The community has successfully targeted stocks with extremely high short interest and leveraged the power of the options market to trigger inordinate short squeezes — known as gamma squeezes — in many of their targets, forcing market makers to buy shares of stock by purchasing out-of-the-money call options. The strategy has worked like a charm so far, and buying volume has been so heavy that brokers have even been forced to temporarily restrict buying in certain stocks. Here are eight stocks the WallStreetBets community loves.
GameStop Corp. (ticker: GME)
Brick-and-mortar video game retailer GameStop has been the poster child of the WallStreetBets buying frenzy. GameStop is the most shorted stock in the market relative to its float, according to S3 Partners. A stock’s float is its number of shares that trade freely on the market and aren’t held by company insiders and institutional investors. After adjusting for synthetic short positions created by market makers, GameStop’s short interest was 58.2% of its float as of Tuesday. Despite reporting a 30% year-over-year drop in revenue last quarter, GME stock is up more than 1,000% in the past month thanks to WallStreetBets.
BlackBerry was once a smartphone leader, but it is in the process of reinventing itself as a mobile security software and services company. BlackBerry has also partnered with Amazon.com (AMZN) to develop an intelligent vehicle data platform called IVY that can be used to read and interpret vehicle sensor data. The turnaround effort has BlackBerry’s revenue once again trending in the right direction, up 15% in 2020. However, the company still reported a net loss of $152 million last year as its struggles continue. Thanks to WallStreetBets, BB stock is up about 120% in the past month.
Bed Bath & Beyond (BBBY)
Like GameStop, brick-and-mortar home furnishings retailer Bed Bath & Beyond has struggled to cope with the economic downturn. Revenue was down 7.2% in fiscal 2020, and the company generated a net loss of $613.8 million. However, the stock is the second-most-shorted stock in the market relative to its float, according to S3. Bed Bath & Beyond had about $2.37 billion in short interest, or about 40.3% of its float after adjusting for synthetic shorts, as of Tuesday. The WallStreetBets short squeeze has sent shares of the struggling retailer soaring about 80% in the past month.
AMC Entertainment Holdings (AMC)
AMC Entertainment owns and/or operates nearly 1,000 movie theaters in the U.S. and Europe. Social distancing crushed AMC’s business in 2020, but WallStreetBets was largely responsible for getting the hashtag #saveAMC trending on Twitter, TikTok and other social media platforms. In the third quarter of 2020, AMC’s revenue plummeted 90.2%, and the company reported a net loss of $905.8 million. However, WallStreetBets has pumped the struggling company’s share price up by about 300% in the past month, and the company’s CEO recently said bankruptcy is “completely off the table” in the near term.
Nokia Corp. (NOK)
Nokia is a global vendor of telecommunications equipment. It also licenses its intellectual property. Nokia’s underlying business isn’t struggling nearly as much as some of the other popular WallStreetBets stocks. In the third quarter, Nokia reported net income of $227 million and only a 6.8% drop in revenue. Nokia is well-positioned to benefit from the global 5G wireless network upgrade cycle, and the work-from-home environment has also increased demand for network equipment. Nokia hasn’t gotten the massive share price bump of other popular WallStreetBets stocks, but NOK shares are still up more than 20% in the past month.
Palantir Technologies (PLTR)
Data analytics company Palantir went public at an opening price of $10 in September. Since that time, the stock has soared to about $36, including a 40% gain in the past month, driven in part by WallStreetBets. Like many of the other recent high-profile initial public offerings, Palantir is generating impressive revenue growth, including 51.8% in the third quarter. However, Palantir is burning through cash and reported an $853 million net loss last quarter. Palantir is also a short holding of GameStop short seller Citron Research, giving WallStreetBets yet another reason to buy.
Struggling mall retailer Express is exactly the type of heavily shorted, small-cap stock that WallStreetBets loves. Revenue plummeted 34% last quarter, and Express reported a $90.3 million net loss. However, the stock is up about 400% in the past month thanks to WallStreetBets buyers putting the squeeze on short sellers. About 15% of Express’ float was held short as of Tuesday, and the stock has surged on record trading volume in recent weeks. Nothing about the company’s underlying business has changed in 2021, but the WallStreetBets community has breathed life back into the company’s battered stock for the time being.
Plug Power (PLUG)
Hydrogen fuel cell maker Plug Power’s shares caught fire during the electric vehicle stock-buying frenzy in 2020, and the stock has continued its meteoric rise in 2021 thanks in part to WallStreetBets. PLUG shares are up another 90% in the past month and are now up about 1,500% in the past year. Plug reported impressive 79.9% revenue growth in the third quarter, but its business is still not profitable. In addition, after the stock’s huge run, shares now trade at about 67 times sales, suggesting some extreme long-term growth is already priced in.
Reddit, set, go with these eight buzzworthy stocks:
— GameStop Corp. (GME)
— BlackBerry (BB)
— Bed Bath & Beyond (BBBY)
— AMC Entertainment Holdings (AMC)
— Nokia Corp. (NOK)
— Palantir Technologies (PLTR)
— Express (EXPR)
— Plug Power (PLUG)
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