WallStreetBets posters are buzzing about these eight Reddit stocks.
Reddit has become an unlikely hub for stock trading in 2021. Groups of retail stock traders have orchestrated targeted buying campaigns in some of the most heavily shorted stocks in the market, triggering massive short squeezes that have sent share prices soaring. Congress even held a hearing to better understand the Reddit trading phenomenon. Some popular Reddit stocks have generated huge returns, but the volatility and unpredictability of these social media meme stocks is not for the faint of heart. Here are the eight latest stocks generating the most buzz in Reddit’s WallStreetBets community, according to Swaggy Stocks.
DocuSign Inc. (ticker: DOCU)
Reddit traders have a reputation of choosing stocks with good stories over ones with sound fundamental businesses and valuation metrics. Unfortunately, electronic signature software provider DocuSign’s pricey valuation caught up with the stock in a big way when its fourth-quarter guidance fell short of expectations. DocuSign said it expects 30% revenue growth in the final quarter of the year, a sharp decline from the more than 40% growth the company has consistently reported in recent quarters. DocuSign shares initially dropped more than 42% following the disappointing guidance news, but some Reddit traders appear to be buying the dip in DOCU stock.
Alibaba Group Holding Ltd. (BABA)
Chinese e-commerce giant Alibaba is another exceptional growth stock that has significantly underperformed in the past year and seems to be facing outside pressures from every direction. The stock is down more than 50% in the past year as China has cracked down on its big tech companies in an attempt to rein in their power. At the same time, Congress recently finalized the Holding Foreign Companies Accountable Act, which would potentially delist Chinese stocks that do not meet rigorous accounting standards. Still, some Reddit traders see a happy ending to a difficult situation for BABA stock.
Apple Inc. (AAPL)
Apple has been bucking the negative market trend in the past month by gaining about 10%. Apple’s business is certainly not immune to concerns that the omicron variant of COVID-19 will further disrupt inconsistent global supply chains. Apple relies on Asian producers, and it is reportedly adopting an “iPhone-first” strategy with its suppliers this holiday season, prioritizing iPhone 13 shipments even if it means further delays in iPad production. Apple’s recent strength may come largely from investors piling into blue-chip stocks for safety. Apple may not be the typical high-flying story stock, but it certainly has Reddit traders talking.
Tesla Inc. (TSLA)
Electric vehicle maker Tesla and its controversial CEO Elon Musk have been trending on Reddit all year. Tesla shares are down more than 15% in the last month, and some of that selling pressure has come from Musk himself. Since Nov. 8, Musk has exercised options to buy 10.7 million shares of TSLA stock and has sold 10.1 million shares worth about $10.9 billion. Musk previously indicated he would sell 10% of his Tesla holdings, suggesting he could dump another 12 million shares in coming weeks. While Musk is selling, Reddit traders appear to be buying the dip.
Didi Global Inc. (DIDI)
Chinese ride-hailing company Didi has been the victim of the same tech crackdown that sent Alibaba shares tumbling. Just two days after Didi’s July initial public offering on the New York Stock Exchange, China ordered Chinese app stores to remove Didi’s main app over data security concerns. On Dec. 3, Didi announced it will be delisting from the NYSE “immediately” and that U.S. shares will be converted into “freely tradable shares” on another international exchange, presumably in Hong Kong. The future is unclear for Didi, but some Reddit traders appear to see opportunity in the chaos.
Meta Platforms Inc. (FB)
Facebook announced a new holding company in late October to mark its new focus on creating the metaverse, a version of the internet that users enter rather than just view. The metaverse has generated plenty of excitement among tech enthusiasts on Reddit and other social media platforms. Meta’s stock is down more than 7% in the past month, however, as the market prices in the risks, costs and potential difficulties in making CEO Mark Zuckerberg’s metaverse vision a reality. WallStreetBets traders have never shied away from risk, and they seem to be all-in on the metaverse.
Nvidia Corp. (NVDA)
Shares of chipmaker Nvidia are up about 120% in 2021. Wall Street analysts see Nvidia as one of the major beneficiaries of Facebook’s rebranding and its planned investments in building the metaverse. The metaverse adds one more massive long-term growth opportunity to the Nvidia bull thesis. Nvidia is also a dominant force in cloud computing, online gaming, artificial intelligence, autonomous vehicles and cryptocurrency mining. Reddit traders seem undeterred by Nvidia’s steep valuation metrics, including its forward earnings multiple of 59 and its price-sales ratio of 33.
ContextLogic Inc. (WISH
It’s hard to go wrong betting on e-commerce, but ContextLogic investors have found a way. In the past three years, Amazon.com Inc. (AMZN) shares have doubled and Shopify Inc. (SHOP) shares are up more than 800%. ContextLogic, the parent company of mobile-centric, e-commerce platform Wish, went public in December 2020 at $24 per share. Roughly one year later, the stock is now trading at around $3. ContextLogic’s marketplace revenue dropped 52% in the third quarter compared to the previous year. The platform’s active buyers are down 32% over the same period, but Reddit traders are betting on a bounce from WISH stock.
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