We recently published a list of 10 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where Antero Midstream Corporation (NYSE:AM) stands against the other stocks.
FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
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A pumping station with its industrial infrastructure in the background.
Antero Midstream Corporation (NYSE:AM)
Number of hedge fund holders: 28
Antero Midstream Corporation (NYSE:AM) is a midstream company, that owns, operates, and develops midstream energy infrastructure services and production activity in the Appalachian Basin’s Marcellus Shale and Utica Shale located in West Virginia and Ohio.
Natural gas has a very bright future because it is a cleaner commodity than coal and is seeing quicker adoption by fast-growing emerging markets. Courtesy of power generation, adoption by industrial markets, hydrogen applications, and transportation markets, the demand for natural gas is expected to remain elevated for the foreseeable future. Midstream companies tend to benefit from increased natural gas volumes because they offer the infrastructure that is required to process and ship natural gas.
Antero Midstream Corporation (NYSE:AM) should benefit from its majority market share because it operates the midstream assets of Antero Resources. This company is a producer having deep reserves and industry-leading breakeven prices in the Appalachian Basin. After going through the business, it was understood that 100% of the company’s cash generation is backed by fixed-fee contracts, which mitigates the commodity risk.
Also, Antero Midstream Corporation (NYSE:AM) should benefit from its recent ~$70 million strategic acquisition from Summit Midstream Corporation (NYSE:SMC), which also includes assets in the Marcellus Shale. This acquisition is expected to be immediately accretive to free cash flow for Antero Midstream Corporation (NYSE:AM) and should support future development plans.
Morgan Stanley upped their price target on the shares of Antero Midstream Corporation (NYSE:AM) from $15.00 to $16.00, giving it an “Underweight” rating on 27th August. At the end of 2Q 2024, 28 hedge funds tracked by Insider Monkey held stakes in Antero Midstream Corporation (NYSE:AM).
Overall AM ranks 6th on our list of stocks that will go to the moon. While we acknowledge the potential of AM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than AM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
