In this article, we discuss the 10 rebounding meme stocks to buy in August. If you want to read about some more rebounding meme stocks to buy in August, go directly to 5 Rebounding Meme Stocks to Buy in August.
Retail traders who use internet platform Reddit to exchange investment ideas are once again in the spotlight as meme stocks rally in the face of short-selling attempts by hedge funds. This battle for market supremacy grabbed headlines in early 2021 and seems to be making a comeback. According to a report by news platform Bloomberg, a group of meme stocks tracked by the platform has risen close to 4% in the past week, as hedge funds begin to disclose their short-selling bets. In the past six days, these stocks have been on a continuous rally.
Retail traders often prefer dealing in meme stocks as opposed to established names in the market like Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Shopify Inc. (NYSE:SHOP) since they are willing to take on riskier bets in the hopes of maximum reward. Ed Moya, a senior market strategist at foreign exchange firm Oanda, told the platform that the rally will only continue as long as a broad rally in growth stocks at the market lasts. A brief rally in tech stocks has pushed the growth-heavy NASDAQ Composite up 10% in the past month.
Mark Taylor, a sales trader at Mirabaud Securities, has said that the “smart guys” in the finance world, referring to hedge fund titans on Wall Street, are baffled and confused by the “sudden resurrection” in meme stocks. Trading volumes in these stocks have jumped in the past few weeks as individual retail traders appear more willing to take on hedge funds, compared to their appetite for risk in the first half of the year.
Our Methodology
These were picked based around the hype on these firms on internet platform Reddit. Companies that have little going for them in terms of basic fundamentals and analyst ratings but have grown popular because of social media interest were preferred for the list. A database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
Photo by Adam Nowakowski on Unsplash
“A Sudden Resurrection”: Rebounding Meme Stocks to Buy in August
10. Gogo Inc. (NASDAQ:GOGO)
Number of Hedge Fund Holders: 25
Percentage Increase in Share Price Over Past Month as of August 10: 5%
Gogo Inc. (NASDAQ:GOGO) provides in-flight connectivity and entertainment services. In late May, William Blair analyst Louie DiPalma noted that the new LEO service of Gogo Inc. (NASDAQ:GOGO) may enable the firm to continue to offer the fastest broadband speeds in the business jet sector and will also almost double the addressable market for the company.
At the end of the first quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $369 million in Gogo Inc. (NASDAQ:GOGO), compared to 25 the preceding quarter worth $241 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Shopify Inc. (NYSE:SHOP), Gogo Inc. (NASDAQ:GOGO) is one of the stocks popular among retail investors.
9. Bed Bath & Beyond Inc. (NASDAQ:BBBY)
Number of Hedge Fund Holders: 15
Percentage Increase in Share Price Over Past Month as of August 10: 104%
Bed Bath & Beyond Inc. (NASDAQ:BBBY) owns and runs a chain of retail stores. The stock has soared sharply in the past week amid rumours of a short squeeze. The squeeze came following reports that the company is seeking to take on private loans as part of plans to bolster liquidity. In the earnings results for the first quarter of 2022, the company had reported that the cash pile it was sitting on had fallen to around $107 million, a sharp drop from the more than $1 billion it had in cash a year prior.
On August 9, Odeon Capital analyst Alexander Arnold downgraded Bed Bath & Beyond Inc. (NASDAQ:BBBY) stock to Hold from Buy with a price target of $7.50, noting that the consensus view on the shares was overly dour.
At the end of the first quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $69 million in Bed Bath & Beyond Inc. (NASDAQ:BBBY), compared to 17 in the previous quarter worth $73 million.
In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Bed Bath & Beyond Inc. (NASDAQ:BBBY) was one of them. Here is what the fund said:
“Bed Bath & Beyond 5.165% 08/2044 declined 67.4% in the period. Bed Bath & Beyond Inc. (NASDAQ:BBBY) reported 4Q21 sales of $2.05 billion, down 22% Y/Y, missing consensus of $2.08 billion. The company lost $0.92 per share in the quarter, down from 4Q20 adjusted EPS of $0.40, below analyst expectations for EPS of $0.03. Management noted supply chain disruptions and the Omicron variant led to inventory availability challenges, which had an estimated sales impact of $175 million, or 8.5% of 4Q21 net sales, and a 400 basis points (bps) Y/Y contraction in 4Q21 adjusted gross margin to 28.8%, driven by product cost increases and higher than anticipated freight and shipping costs. Additional headwinds in the quarter included general weakness in the retail segment, highlighted by big earnings misses from Walmart and Target, along with Moody’s downgrading Bed Bath’s corporate family rating from B1 to B2. The ratings agency cited increased execution risk of the company’s strategic turnaround initiatives and ongoing supply chain issues weighing on the company’s market share and profitability going forward as the main drivers for the downgrade. However, Moody’s maintained a stable outlook for the retailer due to the financial flexibility provided by the company’s liquidity position and low level of funded debt.”
8. Nikola Corporation (NASDAQ:NKLA)
Number of Hedge Fund Holders: 16
Percentage Increase in Share Price Over Past Month as of August 10: 35%
Nikola Corporation (NASDAQ:NKLA) develops energy and transportation solutions. The company posted earnings for the second quarter of 2022 on August 4, reporting a loss per share of $0.25, beating market estimates by $0.02. The revenue over the period was more than $18 million, beating analyst expectations by $1.5 million. The company also revealed that it was on track to deliver 300 to 500 Tre BEV trucks in 2022. In the second quarter, the firm produced 50 Tre BEVs in Coolidge and delivered 48 to dealers.
On August 5, Deutsche Bank analyst Emmanuel Rosner maintained a Hold rating on Nikola Corporation (NASDAQ:NKLA) stock and raised the price target to $8 from $7, noting that the firm was making operational progress by ramping up production.
Among the hedge funds being tracked by Insider Monkey, San Francisco-based firm Inclusive Capital is a leading shareholder in Nikola Corporation (NASDAQ:NKLA) with 8 million shares worth more than 86 million.
7. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 16
Percentage Increase in Share Price Over Past Month as of August 10: 50%
AMC Entertainment Holdings, Inc. (NYSE:AMC) owns and runs theaters in the US and Europe. On August 4, the firm posted earnings for the second quarter of 2022, reporting losses per share of $0.20, beating analyst estimates by $0.03. The revenue over the period was $1.1 billion, up more than 162% compared to the revenue over the same period last year but missing market estimates by $20 million. The firm said it managed 10,148 screens during the period, versus 10,099 in the first quarter.
On July 7, Citi analyst Jason Bazinet maintained a Sell rating on AMC Entertainment Holdings, Inc. (NYSE:AMC) stock and lowered the price target to $5 from $6, noting that the market was pressuring firms with low contractual revenue.
At the end of the first quarter of 2022, 16 hedge funds in the database of Insider Monkey held stakes worth $407 million in AMC Entertainment Holdings, Inc. (NYSE:AMC), compared to 17 in the preceding quarter worth $328 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in AMC Entertainment Holdings, Inc. (NYSE:AMC), with 11.6 million shares worth more than $286 million.
In its Q1 2022 investor letter, Bronte Capital, an asset management firm, highlighted a few stocks and AMC Entertainment Holdings, Inc. (NYSE:AMC) was one of them. Here is what the fund said:
“We are short, in small quantity, almost all the meme stocks. The aggregate “meme stock” position is a few percent, though no individual position is large. We will not name any of these positions other than AMC Entertainment Holdings, Inc. (NYSE:AMC) and Gamestop, the two most iconic meme stocks and the objects of the largest short squeezes in February 2020. Note the positions are small, but they are indicative of what is going on. AMC Entertainment Holdings, Inc. (NYSE:AMC) AMC is an over-levered chain of movie theatres in America with (broadly speaking) slightly less attendance every year. Both these companies raised enough money that bankruptcy is not an immediately likely outcome. (Both would have gone bankrupt except for the willingness of largely retail investors to provide them with much more cash.) Both have bad financial results.”
6. Lemonade, Inc. (NYSE:LMND)
Number of Hedge Fund Holders: 17
Percentage Increase in Share Price Over Past Month as of August 10: 44%
Lemonade, Inc. (NYSE:LMND) provides insurance products. In early August, the company announced that it had offloaded the Enterprise Business Solutions platform to digital insurance firm EIS in an all cash transaction. The solution was a claims automation and fraud detection platform which Lemonade licensed to large insurance carriers. The platform was owned by Metromile, a firm that Lemonade acquired in late July. The exact terms of the deal have not yet been disclosed.
On July 18, Piper Sandler analyst Arvind Ramnani downgraded Lemonade, Inc. (NYSE:LMND) stock to Neutral from Overweight and lowered the price target to $20 from $24, noting that enterprise tech spend could be pressured amid macro headwinds.
At the end of the first quarter of 2022, 17 hedge funds in the database of Insider Monkey held stakes worth $41 million in Lemonade, Inc. (NYSE:LMND), compared to 19 in the preceding quarter worth $62 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Sea Limited (NYSE:SE), and Shopify Inc. (NYSE:SHOP), Lemonade, Inc. (NYSE:LMND) is one of the stocks popular on internet platform Reddit.
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Disclosure. None. “A Sudden Resurrection”: 10 Rebounding Meme Stocks to Buy in August is originally published on Insider Monkey.
