In this article, we discuss AMTD Digital and 4 other meme stocks Redditors are buying in August. If you want to see more meme stocks that Redditors are buying this month, click AMTD Digital and 9 Other Meme Stocks Redditors are Buying in August.
5. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 31
GameStop Corp. (NYSE:GME) is a Texas-based specialty retailer that provides games and entertainment products through online channels and retail stores in the United States, Canada, Australia, and Europe. GameStop Corp. (NYSE:GME) was perhaps the biggest meme stock of 2021, which cost popular Wall Street hedge funds like Melvin Capital Management, D1 Capital Partner, and Point72 Asset Management prominent losses when they aggressively placed short bets against it.
On July 20, GameStop Corp. (NYSE:GME) reported initial success with its NFT marketplace that was launched on July 11. The NFT Marketplace has over 5,000 ETH in trading volume and $7.2 million in value since its launch, which more than doubles Coinbase Global, Inc. (NASDAQ:COIN)’s all-time NFT volume.
Wedbush analyst Michael Pachter on July 22 lowered the firm’s price target on GameStop Corp. (NYSE:GME) to $7.50 from $30 and maintained an Underperform rating on the shares. GameStop Corp. (NYSE:GME) stock remains at levels that seem disconnected from the business fundamentals, and the firm’s turnaround plan has so far been ineffective, as seen by the recent layoffs, the analyst told investors. He is also doubtful about the potential for continued success of its new NFT marketplace.
According to Insider Monkey’s data, GameStop Corp. (NYSE:GME) was part of 31 hedge fund portfolios at the end of Q1 2022, up from 29 funds in the last quarter. D E Shaw is a significant shareholder of the company, with 734,403 shares worth $122.3 million.
Here is what Bronte Capital Amalthea Fund has to say about GameStop Corp. (NYSE:GME) in its Q1 2022 investor letter:
“Gamestop is a retailer of video games on DVD ROM trying hard (and maybe with some success) to reinvent itself as an alternative computer game distributor. The company raised enough money that bankruptcy is not an immediately likely outcome. (GME would have gone bankrupt except for the willingness of largely retail investors to provide them with much more cash.)
Both have bad financial results. Gamestop’s last financial results were terrible. And both stocks more than doubled very rapidly in March from market caps that were absurd to market caps that are more absurd. We are of course completely aware that they can double again and again after that. Their valuations are absurd but if you double the price they are not twice as absurd. They are just similarly disconnected from reality.
The reason we want to talk about them is that it is indicative of what is going on. Gamestop, the most meme of all stocks, announced a possible stock split and the stock, after market that day, traded up 17 percent. We could joke that every child knows that cutting a pizza into more slices yields more pizza. But in this market, not accepting that stock splits add value is a recipe for losing money.”
4. Revlon, Inc. (NYSE:REV)
Number of Hedge Fund Holders: 36
Revlon, Inc. (NYSE:REV) is a New York-based company that manufactures and sells beauty and personal care products worldwide. Revlon, Inc. (NYSE:REV) acquired “meme stock” status in the last few months. Although the company is rumored to be bankrupt, Reddit investors see it as the next Hertz, which filed for bankruptcy in May 2020 and those who bet on the stock ended up making significant profits when the company was acquired for $6 billion in 2021. Although Revlon, Inc. (NYSE:REV) is widely shorted, the stock soared on August 1 after the court allowed it to borrow money for continued operations under Chapter 11 protections. The company was granted a $1.4 billion loan and consequently gained over 100% on August 1 in intraday trading.
Among the hedge funds tracked by Insider Monkey, James Thomas Berylson’s Berylson Capital Partners is the leading stakeholder of Revlon, Inc. (NYSE:REV) as of Q1 2022, with 113,541 shares worth $916,000. Overall, 36 hedge funds were bullish on the stock at the end of the first quarter of 2022, up from 31 funds in the earlier quarter.
Here is what Mittleman Global Value Equity Fund has to say about Revlon, Inc. (NYSE:REV) in its Q1 2022 investor letter:
“For Revlon, given very recent reports by analysts on the extent to which a slowdown in China, higher input costs, and rising interest rates might impact it, MIM provides additional commentary herewith to supplement the update in WWOAW. Revlon’s business is rebounding from the pandemic, despite its stock price continued insistence to the contrary. Sales were +9% in 2021 to $2.08B, adjusted EBITDA +22% to $293M (14.1% EBITDA) margin, gross margin improved to 59.4% from 57.1%. MIM sees the sales rebound accelerating in 2022, estimating +15% to $2.4B (the 2019 pre-pandemic level), and EBITDA at $350M (14.5% EBITDA margin) vs. 12-year average adjusted EBITDA margin of 16.5% (2008-2019) before COVID crushed 2020. The Revlon brand itself performed much better in Q4 2021 (consumption at retail) than the wholesale numbers they reported (Revlon’s sales to its customers, hindered by supply chain disruption) would imply…” (Click here to see the full text)
3. Penn National Gaming, Inc. (NASDAQ:PENN)
Number of Hedge Fund Holders: 36
Penn National Gaming, Inc. (NASDAQ:PENN) is a Pennsylvania-based company that specializes in integrated entertainment, sports content, and casino gaming in North America. Penn National Gaming, Inc. (NASDAQ:PENN) became an overvalued ‘internet meme’ in October 2020, and Redditors have started buying up the shares once again. In Q2 2022, Penn National Gaming, Inc. (NASDAQ:PENN) missed its EPS consensus by $0.35, and the revenue of $1.62 billion jumped 4.5% year over year and exceeded market consensus by $20 million. For its 2022 guidance, the revenue and adjusted EBITDA guidance ranged from $6.15 billion to 6.55 billion and $1.875 billion to $2.0 billion, respectively.
On July 20, Truist analyst Barry Jonas reiterated a Buy rating on Penn National Gaming, Inc. (NASDAQ:PENN) but lowered the price target on the shares to $48 from $60 as part of a broader research note on Q2 results in the Gaming sector. While the most recent quarter should be “fine”, the outlook seems “less certain”, and maintaining a more conservative view is wise, the analyst told investors.
According to Insider Monkey’s Q1 data, 36 hedge funds were bullish on Penn National Gaming, Inc. (NASDAQ:PENN), with combined stakes worth $405 million. Jim Simons’ Renaissance Technologies held the biggest position in the company, comprising 1.78 million shares valued at $76 million.
Here is what Baron Focused Growth Fund has to say about Penn National Gaming, Inc. (NASDAQ:PENN) in its Q1 2022 investor letter:
“Penn declined 18.2% in the quarter and penalized performance by 54 basis points. This was due to investor concerns over continuing losses from its Barstool business. We believe the $50 million of losses this year from its digital business is modest in relation to Penn’s $1 billion of brick and mortar EBITDA. The losses from its digital business represent customer acquisition costs incurred as additional states legalize online gambling. Since it is far less expensive to retain existing customers than to acquire new ones, we expect marketing costs to decline as Penn builds its customer base. Penn’s core bricks and mortar casino business remains strong, and the company has a healthy regional casino business and a strong balance sheet to fund digital losses.”
2. Dropbox, Inc. (NASDAQ:DBX)
Number of Hedge Fund Holders: 44
Dropbox, Inc. (NASDAQ:DBX) is a California-based company that provides a content collaboration platform. On August 4, the company declared a Q2 non-GAAP EPS of $0.38, beating analysts’ predictions by $0.01. The quarterly revenue of $572.7 million jumped 7.9% year over year, outperforming Wall Street forecasts by $1.43 million. The quarter ended with 17.37 million paying users, up from 16.14 million users in the same period last year.
In late May, Jefferies analyst Brent Thill assigned a Buy rating to Dropbox, Inc. (NASDAQ:DBX) but lowered the price target on the stock to $30 from $35. The analyst slashed forecasts across 28 software companies on the back of challenging economic headwinds and the risk of recession.
According to Insider Monkey’s data, Dropbox, Inc. (NASDAQ:DBX) was part of 44 hedge fund portfolios at the end of Q1 2022, with collective stakes amounting to $814.4 million. Seth Klarman’s Baupost Group is the largest position holder in the company, with 10.5 million shares worth $245.7 million.
Here is what RGA Investment Advisors has to say about Dropbox, Inc. (NASDAQ:DBX) in its Q4 2021 investor letter:
“Dropbox really let us down this quarter, not because they did anything wrong, but because during our entire tenure holding this stock, it outperformed in periods where long duration assets (aka higher growth) sold off. This time it did not. Despite people asserting this market bifurcation is about selling growth and buying value, Dropbox shares suffered one of their worst stock market quarters in recent years. It’s hard to identify a specific reason, though one story out there is how some investors thought the company could raise the bar on its 30% targeted operating margin upon achieving those levels. Along with the company’s earnings report, instead of raising the bar, they explained how there is more room to drive margin, but in the mean-time the preference at the company is for investing the potential excesses to drive further growth.
This year, the company will have repurchased nearly 9% of its diluted shares outstanding (perhaps more given the Q4 route in shares) and will have delivered a free cash flow yield upwards of 7.5% on its year-end stock price, while growing upwards of 12%. This is a potent recipe for outstanding returns, yet in a market that’s theoretically seeking cash flow, the stock was punished. We think this is one of the most nonsensical moves of them all and find Dropbox to be an especially compelling opportunity heading into 2022. The top line is certainly growing, as the company continues to withstand competition from Microsoft, Google and Box. Plus management continues to make smart tuck-in acquisitions, showing what may emerge as a scalable, repeatable recipe for deepening their relationship with existing customers, thus driving down churn and setting the stage for prolonged ARPU growth. This potential strategy started with HelloSign, and is further validated with the acquisition of DocSend…” (Click here to see the full text)
1. AMTD Digital Inc. (NYSE:HKD)
Number of Hedge Fund Holders: N/A
AMTD Digital Inc. (NYSE:HKD) is a Chinese company that develops a digital platform for financial, media, marketing, and investment solutions. AMTD Digital Inc. (NYSE:HKD) is the hottest meme stock that Redditors are aggressively pouring into recently. As of August 5, the stock has gained 4,835% in the last month and 390% in the last 5 days as Redditors actively buy up shares. On July 15, the company became public with 16 million shares priced at $7.80. The shares, as of August 5, are priced at $800, with the market cap exceeding $148 billion.
You can also take a look at 10 Dividend Stocks of All Time and 10 Best Cyclical Stocks for Inflation.
