With Reddit’s ever-approaching public debut looming, it remains the go-to place for retail investors to find the ‘next big stock’.
Aug. 17, 2021
It’s a case of the usual suspects right now on Reddit as r/WallStreetBets becomes flooded with a fresh batch of retail traders and investing enthusiasts.
But who are they discussing today, and are they just meme stocks?
A favorite of WallStreetBets for some time now, Clover Health (NASDAQ: CLOV) saw its share price jump more than 3% on Monday after Reddit users pumped up the business.
Having reported widening losses in its Q2 earnings report last week, investors were initially spooked, but it is still early days for the healthcare insurance provider. That being said, with its stock price down more than 45% year-to-date (YTD) as of August 16, perhaps many investors see it as a good time to buy the dip.
If you want to read more about Clover Health and whether you should invest, read our blog here.
Everyone knows Tesla (NASDAQ: TSLA), and that it is a world-renowned electric vehicle (EV) manufacturer with an eccentric CEO in the form of Elon Musk. As one of the most widely traded stocks on Wall Street, it can be susceptible to wild swings, but this business is far from a meme stock.
However, Tesla has come under scrutiny for its troublesome Autopilot system of late. In fact, shares closed down 4.3% yesterday after the National Highway Traffic Safety Administration (NHTSA) announced that safety regulators have launched a formal investigation into its Autopilot system.
Many have seen this as an opportunity to buy the dip, considering shares are up 87% in the last 12 months.
Learn more about Tesla and its top competitor here.
AMC (NYSE: AMC) is the epitome of a ‘meme stock’, having seen its share price soar approximately 1,700% YTD after its infamous, Reddit-induced short-squeeze in January. It hasn’t slowed down either, jumping 7% yesterday off the back of a strong performance in the box office for ‘Free Guy’, the latest summer comedic blockbuster.
Investors have been very bullish on AMC since last week’s earnings call saw losses narrow and the company going on the offensive as COVID-19 restrictions continue to ease.
- Revenue climbed to $444 million, up from $19 million last year — still a ‘tad’ shy of 2019’s $1.5 billion haul in Q2, but let’s not talk about that.
- Its net losses narrowed to $344 million, or $0.71 per share, way down from last year’s $5.36 per share.
- Its soaring stock price has helped it to raise another $1.25 billion in capital, boosting liquidity to $2 billion. A nice little rainy day fund.
That being said, AMC is still a massively risky stock and was in decline long before COVID appeared. Just because it’s being discussed on Reddit doesn’t mean it’s a good investment.
Should I buy Reddit stocks?
Reddit can be a valuable source of information and discussion, but it is also very easy to fall down a rabbit hole when it comes to investing. Recent short-squeezes as we’ve seen with AMC and GameStop (NYSE: GME) can be very attractive but are actually very risky.
It is also completely against the MyWallSt investing philosophy. The best way to invest is by understanding the business and doing your own research.
So how exactly do you figure out hot air from real potential? Check out MyWallSt’s full list of high-growth stocks (including one or two meme stocks mentioned above) by starting your free access now.