In this article, we discuss the 10 stocks Reddit’s WallStreetBets is buying in July 2021. If you want to skip our detailed analysis of these stocks, go directly to the 5 Stocks Reddit’s WallStreetBets is Buying in July 2021.
Reddit forum WallStreetBets, with a user base of more than 10.6 million, has become one of the influential finance platforms on the internet in the past six months. The forum is used by retail investors to exchange information about the stock market. Over the past six months, the forum has been perhaps the single largest source of instability in the market, spoiling hedge fund shorts that have resulted in billions of dollars in losses to big finance. The forum recently went private, limiting membership only to users approved by moderators.
Some of the stocks presently popular on Reddit platform WallStreetBets include GameStop Corp. (NYSE: GME), AMC Entertainment Holdings, Inc. (NYSE: AMC), ContextLogic Inc. (NASDAQ: WISH), and NVIDIA Corporation (NASDAQ: NVDA), among others. Most of these stocks have high short interest and are the subject of a short squeeze by retail investors as hedge funds try to short-sell. These meme stocks, as they have come to be known, have witnessed record rallies in the past six months, rewarding shareholders with triple-digit returns.
The retail investor interest in the stock market has been helped by applications like Robinhood that have made trading easier and more accessible. However, these applications have also become the subject of a tussle between retail investors and big finance as the battle around meme stocks intensifies. Investment bank Goldman Sachs predicts that retail investors will continue to influence the market through the rest of the fiscal year and are expected to invest close to $400 billion into stocks.
According to a report in Financial Times, the influence of WallStreetBets has reached a point where hedge funds have started keeping regular tabs on the forum in order to better understand the market dynamics at any given point in time, thereby shielding themselves from the kind of losses that have resulted in the closure of funds like White Square Capital. As the third quarter begins, it remains to be seen how retail investors will navigate the inflation tailwinds and the dramatic drop in the prices of technology stocks.
These conditions that are not altogether familiar for these young investors. However, even the wider market has been stumped by the present lull around growth stocks. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Mohamed Hadji on Unsplash
With this context in mind, here is our list of the 10 stocks Reddit’s WallStreetBets is buying in July 2021. These were ranked according to the number of mentions of these stocks on Reddit, the basic business fundamentals of each firm, and hedge fund sentiment.
Stocks Reddit’s WallStreetBets is Buying in July 2021
10. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 62
Tesla, Inc. (NASDAQ: TSLA) is placed tenth on our list of 10 stocks Reddit’s WallStreetBets is buying in July 2021. The company’s shares have returned more than 139% to investors in the past year. The firm makes and sells electric vehicles and clean energy equipment. On July 2, investment advisory Morgan Stanley maintained an Overweight rating on the stock with a price target of $900. Adam Jonas, an analyst at Morgan Stanley, predicted that the company’s foray into India would be getting serious investor attention in the coming months.
On July 6, Mark Fields, a former top executive at car maker Ford, told news platform CNBC that Tesla, Inc. (NASDAQ: TSLA) had the first mover advantage in the EV space and once controlled more than 75% of the market. However, Field said this share was decreasing amid increased competition from other companies.
At the end of the first quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Tesla, Inc. (NASDAQ: TSLA), down from 68 in the preceding quarter worth $12 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ: TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
9. Clean Energy Fuels Corp. (NASDAQ: CLNE)
Number of Hedge Fund Holders: 15
Clean Energy Fuels Corp. (NASDAQ: CLNE) stock has returned 311% to investors in the past twelve months. The company provides natural gas for vehicle fueling solutions. It is ranked ninth on our list of 10 stocks Reddit’s WallStreetBets is buying in July 2021. On June 22, the share price of the firm jumped close to 5% after it announced that it had contributed $50 million to a joint venture with energy giant BP.
On June 10, Clean Energy Fuels Corp. (NASDAQ: CLNE) stock plunged more than 12% after the largest shareholder in the firm, TotalEnergies, decreased stake in the firm by dumping 10 million shares. The company has been one of the favorite stocks on Reddit in the past weeks.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Driehaus Capital is a leading shareholder in Clean Energy Fuels Corp. (NASDAQ: CLNE) with 2.3 million shares worth more than $32 million.
Just like GameStop Corp. (NYSE: GME), AMC Entertainment Holdings, Inc. (NYSE: AMC), ContextLogic Inc. (NASDAQ: WISH), and NVIDIA Corporation (NASDAQ: NVDA), Clean Energy Fuels Corp. (NASDAQ: CLNE) is one of the stocks Reddit’s WallStreetBets is buying in July 2021.
8. Corsair Gaming, Inc. (NASDAQ: CRSR)
Number of Hedge Fund Holders: 9
Corsair Gaming, Inc. (NASDAQ: CRSR) is a company that provides gaming hardware, peripherals, and other products. It is placed eighth on our list of 10 stocks Reddit’s WallStreetBets is buying in July 2021. The company’s shares have returned 0.46% to investors in the past four weeks. The high short interest on the stock has sent the share price surging in the past few weeks. On June 14, amid interest on Reddit, the stock climbed more than 14% in a single day.
On May 4, Corsair Gaming, Inc. (NASDAQ: CRSR) posted earnings for the first quarter of 2021, beating market predictions on earnings per share and revenue. The company also raised net revenue outlook for the fiscal year after the earnings report.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Corsair Gaming, Inc. (NASDAQ: CRSR) with 414,300 shares worth more than $13.7 million.
Just like GameStop Corp. (NYSE: GME), AMC Entertainment Holdings, Inc. (NYSE: AMC), ContextLogic Inc. (NASDAQ: WISH), and NVIDIA Corporation (NASDAQ: NVDA), Corsair Gaming, Inc. (NASDAQ: CRSR) is one of the stocks Reddit’s WallStreetBets is buying in July 2021.
7. Palantir Technologies Inc. (NYSE: PLTR)
Number of hedge fund holders: 32
Palantir Technologies Inc. (NYSE: PLTR) is ranked seventh on our list of 10 stocks Reddit’s WallStreetBets is buying in July 2021. The stock has offered investors returns exceeding 5% over the course of the past six months. The company focuses on big data analytics and has a close working relationship with the United States government. On June 30, Grupo Global, one of the largest media brands in South America, announced that it would be extending a partnership with Palantir for use of analytics software for another two years.
On June 24, Palantir Technologies Inc. (NYSE: PLTR) announced that it would be partnering with artificial intelligence firm DataRobot to create a custom product by combining the flagship technologies of both companies.
At the end of the first quarter of 2021, 32 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Palantir Technologies Inc. (NYSE: PLTR), down from 38 in the preceding quarter worth $1.9 billion.
Just like GameStop Corp. (NYSE: GME), AMC Entertainment Holdings, Inc. (NYSE: AMC), ContextLogic Inc. (NASDAQ: WISH), and NVIDIA Corporation (NASDAQ: NVDA), Palantir Technologies Inc. (NYSE: PLTR) is one of the stocks Reddit’s WallStreetBets is buying in July 2021.
In its Q4 2020 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks andPalantir Technologies Inc. (NYSE: PLTR) was one of them. Here is what the fund said:
“In October, we bought a stake in Palantir. Earlier, in June, our concentrated Tech Fund, which has a mandate to also buy shares in the secondary market, bought shares of Palantir from insiders, before the direct listing. At the price we bought, the equity had much more upside than downside. Palantir is operating a software platform that functions as the digital infrastructure for data-driven operations and decision making. The software helps to structure and capture context in data of large corporations. Governments are increasingly realizing that they have to deal with serious data challenges and cyber risk. As most governments cannot attract the most talented software engineers, they need private enterprises such as Palantir to help them build solid infrastructure. Foundry, Palantir’s software for enterprises, is used by companiesto make safer cars and airplanes or to accelerate cancer research. The speed to bring new clients on board is improving and revenues will grow faster than expenses. Palantir has a long runway of growth ahead.”
6. Krispy Kreme, Inc. (NASDAQ: DNUT)
Number of Hedge Fund Holders: N/A
Krispy Kreme, Inc. (NASDAQ: DNUT) is a North Carolina-based retailer of doughnuts, coffee, and other food items. It is placed sixth on our list of 10 stocks Reddit’s WallStreetBets is buying in July 2021. The firm recently went public and fetched a market valuation of close to $3 billion. The company has captured the interest of retail investors on Reddit since it listed on the market. However, the stock has also been volatile. On July 2, the share price fell close to 9% but was still above the price recorded at the end of the first day of trading.
On July 1, Mike Tattersfield, the CEO of Krispy Kreme, Inc. (NASDAQ: DNUT), said that the firm had revamped its business model since the last time it was listed on the stock market. He made the statement as the firm held an initial public offering last week.
Just like GameStop Corp. (NYSE: GME), AMC Entertainment Holdings, Inc. (NYSE: AMC), ContextLogic Inc. (NASDAQ: WISH), and NVIDIA Corporation (NASDAQ: NVDA), Krispy Kreme, Inc. (NASDAQ: DNUT) is one of the stocks Reddit’s WallStreetBets is buying in July 2021.
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Disclose. None. 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 is originally published on Insider Monkey.
