Saturday, October 23, 2021

Reddit Stock Trends in October

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WallStreetBets posters are buzzing about these eight Reddit stocks.

Tesla Inc. (ticker: TSLA)

Reddit has become an unlikely hub for stock trading in 2021. Groups of online retail traders have successfully orchestrated targeted buying campaigns in some of the market’s most shorted stocks, generating massive short squeezes in so-called “meme” stocks. Some of Reddit’s favorite meme stocks have skyrocketed in price, but the extreme volatility and risk associated with these stocks is not for the faint of heart. Congress has even held a hearing to better understand the Reddit trading phenomenon. Here are eight Reddit stocks generating the most buzz in Reddit’s WallStreetBets community in October, according to Swaggy Stocks.

Electric vehicle maker Tesla and its controversial CEO Elon Musk are two of the most divisive subjects on Wall Street, so it’s no surprise that Tesla has been among the top trending Reddit stocks all year. Musk’s most recent controversial decision was the announcement that he is moving Tesla’s headquarters from California to Austin, Texas. Tesla shares hit new all-time highs above $900 earlier this year, but the stock is now trading at 109 times forward earnings and 18 times sales. Reddit traders may agree with Tesla bulls who believe the company will eventually grow into its $785 billion market cap.

Chinese e-commerce and cloud computing giant Alibaba has been at the mercy of regulators throughout 2021. Despite reporting 33.8% revenue growth in the most recent quarter, Alibaba shares were down 29.11% year to date at market close on Oct. 8. The problems started in late 2020 when Chinese regulators halted the initial public offering of digital payment giant Ant Financial, in which Alibaba holds a 33% ownership stake. Chinese regulators have subsequently hit Alibaba with multiple antitrust fines as part of a broader tech crackdown. Reddit traders may see the sell-off as a long-term buying opportunity in one of China’s largest and fastest-growing tech companies.

Alibaba Group Holding Ltd. (BABA)

Tilray Inc. (TLRY)

Tilray has been one of the most volatile stocks in the cannabis space in 2021. The Canadian cannabis producer recently completed a merger with Aphria, making it the world’s largest cannabis company. Tilray shares soared as high as $67 back in February, driven in large part by a cannabis stock short squeeze triggered by social media traders. However, optimism about near-term U.S. federal cannabis legalization has since faded and so has Tilray’s early-year rally. Tilray’s stock price is now back down below $11, but Reddit traders may see another cannabis short squeeze coming at some point.

Smiledirectclub Inc. (SDC) Smiledirectclub has been one of the most heavily shorted stocks in the market since the company completed its initial public offering in 2019. Smiledirectclub priced its IPO at $23 per share. The stock has been a disaster for investors up to this point and now trades under $7. Ortex Analytics recently named Smiledirectclub one of its top potential short squeeze candidates for the month of October. In fact, around 50% of the stock’s float, or fee-trading shares, is held in short positions. Reddit traders must agree that the company has all the ingredients for a major short squeeze at some point.

ContextLogic Inc. (WISH) E-commerce company ContextLogic is another example of an IPO flop that Reddit traders see as a potential buying opportunity. ContextLogic went public in December 2020 at an IPO price of $24. Less than a year later, the stock is barely trading above $5. In the most recent quarter, ContextLogic reported a 6.4% drop in revenue and a $111 million net loss, which are discouraging trends in the high-growth e-commerce space. Monthly active users also dropped 22% in the quarter. Despite the lackluster quarter, Reddit traders must see the potential for a ContextLogic turnaround given all the recent buzz surrounding the stock.

Facebook Inc. (FB) Social media giant Facebook has navigated a whirlwind of negative headlines in recent weeks. On Oct. 4, Facebook and subsidiary platforms Instagram and WhatsApp suffered major outages lasting more than six hours. That same week, former Facebook employee Frances Haugen testified before Congress after leaking a trove of internal Facebook documents to the Wall Street Journal and said that Facebook knew that its platforms harmed its users. Facebook shares are down more than 12% in the past month, but Reddit traders may believe the company’s latest issues are merely another bump in its road of long-term growth.

Apple Inc. (AAPL) Reddit users have a reputation for betting on unprofitable, high-risk “stonks.” But Apple is one of the highest-quality blue-chip stocks in the market. The iPhone maker generated $57.4 billion in net income and invested $86.6 billion in dividends and buybacks in fiscal 2020. Apple rolled out the new iPhone 13 product family in September, and analysts are optimistic about another big upgrade cycle. Reddit traders don’t seem to be concerned about potential supply chain disruptions in Asia or recent changes to Apple’s App Store rules lowering commissions and allowing third-party apps to direct customers outside the Apple ecosystem.

Advanced Micro Devices Inc. (AMD) Shares of chipmaker Advanced Micro Devices have skyrocketed 1,480% in the past five years. AMD has exposure to some of the fastest-growing markets within the tech sector, including PC gaming, data centers and autonomous vehicles. Amid a global semiconductor shortage, AMD reported 99% revenue growth in the second quarter and guided for full-year sales growth of 60%. Like many other high-growth stocks, AMD investors are paying a steep price for their shares, which are currently trading at about 9.7 times sales. However, Reddit traders seem undeterred and are betting on even more upside ahead for AMD stock.

News Summary:

  • Reddit Stock Trends in October
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