The Reddit community could send these stocks soaring.
Reddit became an unlikely hub for stock trading in early 2021. Groups of online traders in Reddit’s WallStreetBets community orchestrated targeted buying campaigns in some of the market’s most heavily shorted stocks, triggering massive short squeezes and sending share prices of so-called meme stocks skyrocketing. The price action associated with these stocks was so extreme that it triggered temporary trading restrictions and even prompted a congressional hearing. Unsurprisingly, many traders want to jump on the next big meme stock, but the unpredictability associated with these volatile securities 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, a social media tracking tool.
Tesla Inc. (ticker: TSLA)
The first of the Reddit stocks on traders’ lips is electric vehicle maker Tesla, although the company and its controversial CEO Elon Musk are seemingly always trending on social media. Tesla got off to a hot start to 2022 after reporting 308,500 vehicle deliveries in the fourth quarter, compared with analyst estimates of only 267,000. For the full year of 2021, Tesla delivered 936,172 vehicles, up 87% from 2020 and beating analyst estimates of 897,000 deliveries. Tesla will face unprecedented EV competition in 2022, and TSLA stock trades at a steep price-sales ratio of 22.7. Despite those odds, WallStreetBets traders are riding Tesla’s bullish momentum for now.
Apple Inc. (AAPL)
After a lackluster start to 2021, Apple finished the year strong and is up about 20% in the past three months. Apple made history on the first trading day of 2022, when it rallied to become the first company in history with a $3 trillion market cap for a brief moment. Apple has been struggling to deal with pandemic-related supply chain disruptions in Asia, but the blue-chip tech stock continues to deliver mind-boggling profits, including $20.6 billion in net income in its fourth quarter alone. Apple may not be the high-growth tech stock it once was, but it certainly has WallStreetBets buzzing.
Microsoft Corp. (MSFT)
Microsoft is another trillion-dollar, blue-chip tech company that quietly outperformed the market in 2021. Microsoft may not be the flashiest tech sector growth stock, but it reported fiscal 2021 revenue growth of 18%, and its combination of professional software tools and cloud services has made it a cash cow for investors in recent years. In December, Microsoft informed some Office subscribers paying by the month that it is raising Office prices by 20% unless they switch to an annual subscription, which could boost recurring revenue and margins. WallStreetBets traders may see the price hike as a bullish catalyst.
Nvidia Corp. (NVDA)
Reddit stocks tend to be growth- and momentum-oriented, and Nvidia is no exception. Shares of chipmaker Nvidia were up more than 125% in 2021, making it one of the 10 best performing stocks in the entire S&P 500. Nvidia is a dominant force in most tech megatrends, including cloud computing, online gaming, artificial intelligence, autonomous vehicles, cryptocurrency mining and the metaverse. In December, the Federal Trade Commission sued Nvidia to block its pending $75 billion acquisition of semiconductor-design specialist Arm Ltd. on antitrust grounds. Reddit traders seem undeterred by the antitrust suit and Nvidia’s steep valuation metrics, including its forward earnings multiple of 53 and its price-sales ratio of 29.
GameStop Corp. (GME)
Video game retailer GameStop was the original Reddit meme stock. Entering 2021, GameStop was one of the most heavily shorted stocks in the entire market. WallStreetBets traders recognized the opportunity and piled into GameStop, sending its share price soaring from less than $15 to as high as $483 in the opening weeks of 2021. Since that initial squeeze, GameStop shares have drifted steadily lower as losses mount and revenue lags behind pre-pandemic levels. Reddit traders may be hoping for a repeat performance from GameStop in the first quarter of 2022, but the stock has shown no sign of life in recent weeks.
Roblox Corp. (RBLX)
The metaverse has become a trendy investment theme after Facebook recently changed its corporate name to Meta Platforms Inc. (FB) and said it is focused on building a virtual online environment in which people live, work and play. Roblox is an online entertainment platform that may be the closest thing to an existing social metaverse today. Roblox is essentially a video game that has more than 40 million daily active users, its own digital currency and a wide range of unique virtual experiences such as live digital concerts and events. WallStreetBets traders seem to be betting on the metaverse with RBLX stock.
Advanced Micro Devices Inc. (AMD)
Like Nvidia, chipmaker Advanced Micro Devices is exposed to some of the largest and fastest-growing tech fields, including PC gaming, data centers and autonomous vehicles. The company’s booming sales growth has generated a more than 1,100% increase in stock price over the past five years. AMD recently reported impressive 53.9% revenue growth in the third quarter, and the company expects to complete a $35 billion takeover of semiconductor company Xilinx Inc. (XLNX) in the first quarter. Reddit investors are betting AMD’s market share gains and growth momentum will continue in 2022, and they are undeterred by the company’s lofty 11 price-sales ratio.
Ford Motor Co. (F)
Tesla and other EV startups got a lot of attention from Wall Street in 2021, but legacy Detroit automaker Ford finished the year as the top-performing auto stock in the S&P 500. In addition to its pledge to invest $30 billion in vehicle electrification technology by 2025, Ford recently made the controversial decision to reinstate its dividend of 10 cents per share for the first time since it suspended its payouts in 2020. WallStreetBets traders appear to have high hopes for Ford’s vehicle lineup in coming years, including the Mustang Mach-E EV, the reintroduced Bronco and the F-150 Lightning EV.
8 Reddit stocks trending in January:
— Tesla Inc. (TSLA)
— Apple Inc. (AAPL)
— Microsoft Corp. (MSFT)
— Nvidia Corp. (NVDA)
— GameStop Corp. (GME)
— Roblox Corp. (RBLX)
— Advanced Micro Devices Inc. (AMD)
— Ford Motor Co. (F)
More from U.S. News