In this piece, we will take a look at 10 new stocks Reddit’s WallStreetBets is buying.
The surge of the Internet and the easy access to financial information, courtesy of the personal computing revolution, means that investing is no longer limited to the professionals. While Wall Street of the 1950s and onward was made of traders relying on hand made graphs of daily stock price movements to decipher long term trends, now, anyone with a computer and an internet connection has access to similar and more sophisticated tools.
This has also led to the rise of retail investing, which first made its mark during the coronavirus pandemic. Between 2020 and 2021, more than thirty million brokerage accounts were opened in the US, and the low interest rates coupled with coronavirus stimulus checks led to these traders accounting for 15% of the market’s trading volume in September 2020. Data from investment bank Morgan Stanley shows that retail traders tend to prefer well known consumer facing stocks, and crucially, the bank’s proprietary methodologies also show that in the five years between 2016 and 2021, stocks that garnered interest from retail investors ended up outperforming those without it.
Building on this, the pandemic and the surge of information in today’s age have also shifted the dynamics of how America views wealth preservation. A fresh survey from Gallup shows that while real estate continues to dominate as Americans’ favorite investment regardless of their income bracket, stocks come in second place for middle and high income families. This preference for equities dropped after the Great Recession of 2008 which wiped out some of the biggest companies in the world after risky bets on mortgage securities shattered Wall Street’s public image. According to Gallup’s data, the percentage of Americans who own stocks is the highest in 2024 since 2007 – or before the global economic crisis. Stock ownership stood at 52% of those polled – an all time low – in 2013 and 2016.
It slowly picked up and sat at 55% in 2020, and has risen every year since then to a post 2007 high of 62% in 2024. In fact, the last time stock ownership was higher than it is right now was in 2004 when 63% of Americans owned stocks during an era when interest rates were relatively low and the housing market was booming – economic conditions that are on a completely different spectrum than what we’re experiencing right now.
Building on this, the divergence between retail investors and hedge funds came to the forefront of the investing world during the meme stock mania that saw the former pump up video game retailing and entertainment chain stocks as they rallied on social media and particularly Reddit’s WallStreetBets, this trend continued in 2023. Data from S&P shows that in October when market sentiment about interest rates and the economy was at its lowest, retail investors sold off $15.64 billion in stocks for their largest monthly outflow since 2021. However, at the same time, the hedge funds appeared to smell blood. In a classic illustration of Warren Buffett’s mantra of being greedy when others are fearful, the hedge funds bought $5.56 billion in stocks. Their three favorite sectors were real estate, utilities, and materials, with real estate and utilities witnessing the inflows after smart money flew out in the prior month. For some great Warren Buffett quotes, you can check out Warren Buffett’s 35 Best Quotes About Business, Investing, and Life.
Judging by this, it appears that retail investors are driven by their economic perceptions instead of setting up their portfolios during a downturn. This is also evident in Charles Schwab’s Trader Sentiment Survey released in February 2024. The bank’s data reveals that 52% of retail traders planned to move more money into stocks during Q1 2024, which marks a 7 percentage point sequential gain. This also coincides with their view of the economy, as 48% think that the US will avoid a recession in 2024 and 53% are bullish for the stock market.
With this context and as retail traders start to become bullish once again, we decided to take a look at how their previous bets have performed. The GameStop short squeeze of 2021 brought the Reddit subreddit WallStreetBets into the limelight and made Roaring Kitty a global celebrity. We covered some WallStreetBets stocks in 2021 and 2023, and in this piece, we’ll analyze how the top 2021 stocks have performed since then. If you’re interested in similar content, we also evaluated Cathie Wood’s stock performance as part of our coverage of 10 Best Stocks to Buy and Hold For 5 Years According to Cathie Wood.
Image by Sergei Tokmakov Terms.Law from Pixabay
Our Methodology
For our list of stocks, we took a look at our 2021 coverage of Forget AMC and Gamestop: 10 New Stocks Reddit’s WallStreetBets Is Buying and evaluated how these stocks have performed since June 2021. The stocks are re-ranked according to their share price percentage performance.
For these stocks, we also mentioned hedge fund sentiment. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Workhorse Group Inc. (NASDAQ:WKHS)
Share Price Performance Since July 2021 Start: -99.53%
Number of Hedge Fund Investors In Q1 2024: 3
Workhorse Group Inc. (NASDAQ:WKHS) is an electric car manufacturer headquartered in Ohio. It was part of a set of electric vehicle stocks that soared during the pandemic as investors hungrily searched for another Tesla. While Workhorse Group Inc. (NASDAQ:WKHS)’s shares soared initially after it entered the final stages of a sizeable contract with the Postal Service, the stock saw a lot of turbulence after it confirmed an SEC investigation for insider trading related to the deal. It took a year for the company to resolve these differences, and despite the fact that the SEC did not take any enforcement actions against the firm, the stock had lost 89% of its value between July 2021 and the start of January 2023. Workhorse Group Inc. (NASDAQ:WKHS) also lost the USPS contract to Oshkosh, which further dented its share price. Like other EV companies, the firm’s success depends on its ability to scale up manufacturing and make deliveries – and Workhorse Group Inc. (NASDAQ:WKHS) isn’t doing well on either front. The firm is yet to turn a profit, and its $25.8 million in cash is just 2x its accounts payables.
Workhorse Group Inc. (NASDAQ:WKHS) is focused on production though, and during its Q4 2023 earnings call, management shared:
During the year, we rolled out our first W56 step van, signed up our first fleet customers and established our production capabilities for the W4CC and W750 vehicles. We also expanded our commercial dealer network, adding new dealers and up bidding partners in multiple states. In our aero business, we continue to expand our relationship with key government agencies and partners. Let’s review the key accomplishments and successes we achieved at Workhorse in 2023. We will have four distinct commercial EV products in production and we have four distinct commercial EV products in production. We received important HVIP certification for both our Class 4 and our Class 5,6 vehicles. We secured initial fleet orders for the W56 step vans and strip chassis, and we organically grew the stables business.
Additionally, we completed the overhaul of our Union City manufacturing complex. The Workhorse Ranch is now capable of building 5,000 and painting 3,000 vehicles per year on one shift. Our lean, highly flexible production facility can ramp up staffing and production in line with future market demand. At our Aero business, we sold our first units. We are on track for FA certification in first quarter this year, landed several government funded grants all while we continue to evaluate alternatives for the business. Moving to Slide 6. We have stabilized production of both the W4CC and W750 miles and handed those production over to the plant, while continuing dealer programs and field demonstrations for both of these vehicles. Notably, we successfully overcame unexpected issues with California’s HVIP program and worked with the California Air Resources Board to list the W4CC and the W750 in the HVIP program in a first of its kind program for intermediate vehicle manufacturers.
9. Virgin Galactic Holdings, Inc. (NYSE:SPCE)
Share Price Performance Since July 2021 Start: -99.08%
Number of Hedge Fund Investors In Q1 2024: 8
Virgin Galactic Holdings, Inc. (NYSE:SPCE) is a space tourism company. Like EV stocks mirrored Tesla’s performance in 2021, Virgin Galactic Holdings, Inc. (NYSE:SPCE) saw retail and institutional investor interest in 2021 because of SpaceX’s successful first crewed mission for NASA in 2020. Investors were hungry for space stocks, and Virgin Galactic Holdings, Inc. (NYSE:SPCE) was helped by its founder Richard Branson’s celebrity status. However, while the shares did well initially, they started to bleed in 2021 after a series of bad news for investors. These included a delay in flights due to problems with materials suppliers and Virgin Galactic Holdings, Inc. (NYSE:SPCE)’s plan to raise funds through a share sale. The stock wasn’t helped by high interest rates or the pandemic, with Branson announcing last year that he would no longer fund Virgin Galactic Holdings, Inc. (NYSE:SPCE). The firm also conducted its final spaceflight in June 2024, as it has announced a two year hiatus to develop a next generation spacecraft. This pushes Virgin Galactic Holdings, Inc. (NYSE:SPCE) into a non operational phase, and naturally, investors aren’t pleased.
However, Virgin Galactic Holdings, Inc. (NYSE:SPCE) is optimistic about its future spacecraft, with management commenting during the first quarter earnings call:
And I’m pleased to share that we now expect VMS Eve to support three space missions per week, a 50% increase over prior base case estimations. This is fantastic news. We expect Eve and our first two Delta ships will be able to execute approximately 125 space flights carrying 750 or so astronauts to space each year. To put that in perspective, Eve and the first two Delta ships will bring more people to space in a single year than the total number of astronauts who have ever journeyed to space to-date.
Economically, that equates to roughly $450 million in annualized revenue within the first 12 months following entry into commercial service. Of course, those numbers are expected to grow substantially as we scale our operations by adding new ships and expand across multiple spaceports. During today’s call, I’ll ask Doug Ahrens, our Chief Financial Officer, to shed more light on our financial operating model, giving you a sense of what our economics are estimated to look like with the initial rollout of our first 2 Delta ships and in the years to follow.
8. ContextLogic Inc. (NASDAQ:WISH)
Share Price Performance Since July 2021 Start: -98.34%
Number of Hedge Fund Investors In Q1 2024: 11
ContextLogic Inc. (NASDAQ:WISH) is an eCommerce company based in California. It was one of the hottest eCommerce companies in 2019 after becoming one of America’s largest companies of its kind. However, ContextLogic Inc. (NASDAQ:WISH) has struggled on the financial and reputational fronts since then. Starting from the latter, the firm faced a major setback in 2021 after Google delisted its platform in France. This came a year after multiple reports revealed that ContextLogic Inc. (NASDAQ:WISH) was selling unsafe or illegal products on its platform. These troubles weren’t helped by lackluster financial performance and legal troubles. ContextLogic Inc. (NASDAQ:WISH) has faced multiple lawsuits, ranging from those targeting alleged counterfeit products to those that allege that the firm misguided investors and overstated financial metrics. ContextLogic Inc. (NASDAQ:WISH) is yet to turn a profit, and the stock tumbled by double digit percentages in 2023 after it missed analyst estimates for its first and second quarter earnings. The firm’s main eCommerce platform, Wish, was sold to a Singaporean company for $173 million in 2024.
7. Skillz Inc. (NYSE:SKLZ)
Share Price Performance Since July 2021 Start: -98.23%
Number of Hedge Fund Investors In Q1 2024: 8
Skillz Inc. (NYSE:SKLZ) is an entertainment services provider that enables users to host video game tournaments. It generated quite a bit of hype in 2020 after becoming the first eSports organizer to go public. However, soon after, Skillz Inc. (NYSE:SKLZ)’s stock faced trouble on the stock market as it tried to rely on a blossoming share price to raise more capital by issuing more stock. Such decisions generally do not bode well for young companies, and the stock tanked by 13% in March 2021 when the news hit the wires. This was followed by a 48% drop in December 2022 after the firm shared that it might be delisted from the NYSE. The stock fell another 19% in premarket trading in June 2023 when Skillz Inc. (NYSE:SKLZ) announced a reverse stock split. Investors viewed the decision as Skillz Inc. (NYSE:SKLZ)’s management attempting to prop up the stock without any underyling improvement in its fundamentals. The share price drops continued in 2024, after the firm’s first quarter earnings saw Skillz Inc. (NYSE:SKLZ) report a $26.7 loss that overshot analyst estimates of a $25.78 million loss.
Skillz Inc. (NYSE:SKLZ)’s Q1 2024 earnings call was quite an event as it saw management comment in detail about its legal attempts to combat fraud through bots. On the operational front, they were more sober and shared:
With that said, we have some near-term challenges in Q1, which masked some of the progress. We know that progress on our turnaround initiatives will take time, and it won’t always be linear every quarter, particularly in a period such as Q1, where we implemented several initiatives. That said, our ability to make further progress in improving retention, engagement, monetization, and increasing our audience was not optimized in Q1. This is evident in our paying users for the quarter, with Paying MAU declining to 121,000 in Q1 2024 from 137,000 in Q4 2023. While this rate of sequential decline is significantly less than the sequential rate of decline from Q3 2023 to Q4 2023, we expected to perform better than we did. In Q1, we saw issues with new customer on-boarding, and while we quickly took several actions, these actions did not fix the on-boarding issues enough to benefit our performance in Q1.
We continue to address new player on-boarding issues and believe that as of late April, we’ve implemented the necessary changes to improve on-boarding of new customers and get us back on track to execute our improvement initiatives. While our fixes to on-boarding issues are still in the early stages, the data we have so far indicates our audience decline has slowed. At this time, we do not believe the on-boarding issues and our execution in Q1 will stop skills from being adjusted, even though positive in Q1 will stop skills from being adjusted EBITDA positive in Q4 2024. At the same time, we continue to do a good job with expense management with Q1 2024 OpEx in line with Q4 2023, excluding Q4 one-time accrual reversals. Our adjusted EBITDA loss again improved on a year-over-year basis.
6. Clover Health Investments, Corp. (NASDAQ:CLOV)
Share Price Performance Since July 2021 Start: -89.15%
Number of Hedge Fund Investors In Q1 2024: 12
Clover Health Investments, Corp. (NASDAQ:CLOV) is a healthcare company that provides coverage and technology services to patients and physicians. It is another firm that utilized the relatively shorter route of using a SPAC firm to go public in 2020. A little known fact about Clover Health Investments, Corp. (NASDAQ:CLOV) is that it was also another stock part of the meme stock mania of 2021. Its shares first dropped in 2021 after well known short seller Hindenberg Research claimed that the firm’s software offering Clover Assistant was under a Justice Department investigation. Clover Health Investments, Corp. (NASDAQ:CLOV) announced the day that it was under an SEC investigation. Following the disclosure, the stock. bled 46% until mid May, when hungry retail investors pumped up its price by 101% until early June. Later during the year, Merrill Lynch downgraded the stock and claimed that the firm was overvalued compared to its growth trajectory. Clover Health Investments, Corp. (NASDAQ:CLOV) also announced a $300 million stock offering in November 2021, and this didn’t bode well due to dilution concerns. Clover Health Investments, Corp. (NASDAQ:CLOV)’s revenue also fell by 41% annually in 2023 to $2 billion – removing the final crutch of revenue growth from the stock price.
However, Clover Health Investments, Corp. (NASDAQ:CLOV) did have some good news for investors during its Q1 2024 earnings call where management shared:
We have therefore, significantly improved our guidance for the full year 2024 to a range of positive $10 million to $30 million. Our profitability performance was driven by continued outperformance in our insurance offering fundamentals, including revenue growth and Medic management, as well as durable reductions in our adjusted SG&A. For insurance revenue, we are proud that we delivered strong year-over-year revenue growth of 8%, while also simultaneously expanding margins. This is a continued step forward in our commitment to grow revenues in a sustainable way. Improvements came from a strong focus on Clover Assistant product advancement, operational enhancements to improve the accuracy of our risk adjustment submissions, and a focus on member retention.
We’re proud of these improvements. And as a result, we are also raising our full year insurance revenue guidance to be between $1.3 billion and $1.35 billion.
5. Paysafe Limited (NYSE:PSFE)
Share Price Performance Since July 2021 Start: -87.01%
Number of Hedge Fund Investors In Q1 2024: 25
Paysafe Limited (NYSE:PSFE) is a payments services provider headquartered in London, the United Kingdom. The stock lost most of its value in 2021, the year in which it started trading on the NYSE. The first of these drops started soon after the listing. Paysafe Limited (NYSE:PSFE)’s shares started to tank in April 2021, although the drops were related more to a weakening macroeconomic environment as the impact of coronavirus lock downs continued to wreak havoc. The stock dropped by nearly 14% in August, after Paysafe Limited (NYSE:PSFE)’s third quarter revenue guidance of $360 million to $375 million missed analyst estimates of $384 million. The final nail in Paysafe Limited (NYSE:PSFE)’s coffin came in November 2021 when it reported earnings for the third quarter. The figures saw it report $353 million in revenue, which was significantly lower than $370 million in analyst expectations. It also cut earnings guidance by $60 million and revenue guidance by a whopping $700 million. Paysafe Limited (NYSE:PSFE)’s shares tanked by 41% as a result and have whimpered since then.
However, Paysafe Limited (NYSE:PSFE)’s shares soared by 24% in May 2024 when its $0.57 in earnings and $417 million in revenue beat analyst estimates of $0.55 and $408 million. During the earnings call, management shared:
As we broaden our wallet portfolio, this will allow Paysafe to strategically market to its new consumer groups and unlock market expansion. And, now that we’ve established three continuous quarters of growth in our classic digital wallet active users, we feel it’s important to transition our metrics to a broader view of the portfolio consistent with how we’re looking at the consumer segment going forward. Here, we’re showing a consumer acquisitions for the first quarter, which is approximately 1.4 million comprising new users from all consumer products and revenue streams. This led to 7.5 million active users for the quarter. While ARPU will vary across products, our focus on building an expanded wallet platform steers us towards a stronger scalable model to drive sustainable growth and value for Paysafe, our merchants and our consumers.
4. Clean Energy Fuels Corp. (NASDAQ:CLNE)
Share Price Performance Since July 2021 Start: -76.04%
Number of Hedge Fund Investors In Q1 2024: 20
Clean Energy Fuels Corp. (NASDAQ:CLNE) is a California based company that provides natural gas infrastructure to power up vehicles such as trucks. It is also one of the few companies of its kind that not only provides natural gas for transportation but also provides renewable natural gas derived from animal waste. This means that while Clean Energy Fuels Corp. (NASDAQ:CLNE) enjoys significant competitive advantages and low competition, it has to create its own industry. This requires investment, and despite being in business for years, Clean Energy Fuels Corp. (NASDAQ:CLNE) has mostly operated at a loss. The stock came at the center of the meme stock mania in June 2021 when its shares soared by 29% after data showed its popularity on internet boards. CNBC’s Jim Cramer initially tweeted that Clean Energy Fuels Corp. (NASDAQ:CLNE) had “had no real revenue growth and almost no profitability in a decade” but later shared that perhaps the firm’s time had come after mentioning its deals with big ticket names like Amazon. After the mania was over, the stock declined by 8% in August. This followed a 17% drop in June after the retail buying as the market learned that Clean Energy Fuels Corp. (NASDAQ:CLNE)’s largest investor, oil mega giant Total, had sold ten million shares.
Amidst years of struggles, Clean Energy Fuels Corp. (NASDAQ:CLNE)’s management shared some progress on its market prospects during the first quarter earnings call when it highlighted:
It pleases me to say that we kicked off 2024 with a strong first quarter. Our base business of fueling fleets, constructing and maintaining stations for those fleets, and providing other services that keeps trucks, shuttles and buses operating on a clean fuel performed well. We also made good progress in our business of developing renewable natural gas dairy projects. I’ll expand with a few more details on both in a moment. The 8.6% year-over-year growth in RNG fuel volumes is a testament to the stability and growth in our base business. In addition, it reflects the significant RNG volume that is now flowing through the new state-of-the-art fueling stations that we have built and opened over the last two years, where we have an anchor customer in Amazon.
We are also seeing other vehicles begin to fuel at these stations, which helps our fuel margins. As always Bob will give you more details about our financial results, but I would be remiss in not calling out the $12.8 million in adjusted EBITDA for Q1 compared to minus $4 million of Q1 of last year. The significant upswing is attributed to the growth in our core business that I just mentioned, as well as circumstances which we found ourselves during the beginning of last year with historically high natural gas prices in California that impacted our bottom line. Our balance sheet remains strong with almost $250 million of cash and investments on hand. And you should see continued, improved adjusted EBITDA results through this year. I’d like to take a moment to address the environmental credit situation because I think some might tie the ups and downs of those prices a little too tightly to our overall business.
3. Corsair Gaming, Inc. (NASDAQ:CRSR)
Share Price Performance Since July 2021 Start: -68.5%
Number of Hedge Fund Investors In Q1 2024: 12
Corsair Gaming, Inc. (NASDAQ:CRSR) is one of the oldest companies on our list as it was set up in 1994. It sells video gaming accessories such as keyboards and mice. Therefore, the firm is on a much more stable footing fundamentally when compared to most of the stocks that WallStreetBets bought in 2021. Corsair Gaming, Inc. (NASDAQ:CRSR)’s shares also soared in 2021 on the back of equally strong fundamentals that were driven by a greater demand for personal computing products due to the pandemic lock downs. Naturally, the stock also generated hype on social media. The 162% share price gain between its listing in September 2020 and February 2021 proved that Corsair Gaming, Inc. (NASDAQ:CRSR)’s decision to expand into the live streaming gear market through a 2018 acquisition was well timed. Its revenue and earnings of $556 million and $0.53 respectively during the fourth quarter of 2021 smashed analyst estimates of $528 million and $0.46. Its shares soared by 30% in June 2021 after trading volume exceeded 20x the daily average. Retail investors had discovered that Corsair Gaming, Inc. (NASDAQ:CRSR)’s short interest back then was 18%, and they worked together to inflict massive blows on hedge funds. However, as the pandemic trends have died down, and the personal computing market has struggled amidst aggressive interest rate hikes, the shares have now returned to reasonable valuation levels.
Since it had some fundamentals to fuel its valuation, Corsair Gaming, Inc. (NASDAQ:CRSR) had a good first quarter. During the earnings call, management shared:
2024 is starting out as expected with new products driving a rebound in peripherals growth. Our Gaming and Creator Peripherals segment has continued its impressive performance, achieving 20% year-over-year revenue growth in the first quarter of 2024 after 16% year-over-year revenue growth in the fourth quarter of 2023. We are very pleased that growth is coming from all product lines. This was across Elgato with its popular Stream Deck products, SCUF Gaming with the successful recent launch of PC controllers, and Corsair peripherals with several new keyboards, headsets and mice. We were particularly pleased to see the gross margin lift to 40% with these new product launches.
We fully expect to build on this momentum over the coming quarters with an exciting lineup of planned product launches, some of which we will discuss on the call today. Demand was more subdued in the component market as is normal in this stage of the GPU cycle. In the short-term, the self-built PC market is stable with the next surge expected in late 2024 and 2025, when next-gen GPUs and CPUs are launched. We are also already seeing some benefit in the pricing of our most popular DRAM modules as gamers are using higher DRAM capacity for faster gameplay. Give you a sense of how big the memory opportunity is, it is estimated that 95% of steam gamers have less than 16-gig of memory in their systems. That represents a huge opportunity for us. We continue to have high market share in the component space, which we are focused on further growing, led by a strong planned product launch schedule, including several recent launches with our 2500 & 6500 Series Cases, iCUE Link RX Series Fans, and CORSAIR ONE platform upgrade.
2. UWM Holdings Corporation (NYSE:UWMC)
Share Price Performance Since July 2021 Start: -15.36%
Number of Hedge Fund Investors In Q1 2024: 19
UWM Holdings Corporation (NYSE:UWMC) is a mortgage lender based in Michigan. It created quite a bit of hype in January 2021 when its $16.1 billion valuation made it the most valuable firm to be bought by SPAC back then. By April 2021 though, UWM Holdings Corporation (NYSE:UWMC)’s shares had lost their luster and were trading at roughly $7.5 – below the pre merger price of $10. Back then, the housing market was fine and the firm was not struggling financially, so the drop indicated that perhaps investors were tired of SPAC stocks. November 2021 was catastrophic, as the stock tanked by 20% after UWM Holdings Corporation (NYSE:UWMC) announced a secondary offering. This also reignited interest from WallStreetBets, but the stock ended up reversing the losses after UWM Holdings Corporation (NYSE:UWMC) suspended its offering. High interest rates aren’t great for the mortgage industry, and the shares bled 45% in 2022 as rates were significantly increased. However, UWM Holdings Corporation (NYSE:UWMC)’s stock is up by 104% since its December 2022 bottom – indicating that WallStreetBets stocks with some fundamental strength actually end up doing well based on their performance and macroeconomic performance.
As for its future, here’s what UWM Holdings Corporation (NYSE:UWMC)’s management had to say during its Q1 2024 earings call:
As these results demonstrate, we continue to deliver on our expectations by remaining focused on being the best mortgage lender in the country. That means continuing to invest in our people and our technology and our service, no matter what others in the industry are doing. We know what we are good at and we know what we’re great at. We don’t try to be all things to all people and we win because of it. As you will hear from Andrew shortly, our financial position is very strong and we fully intend to keep rewarding our shareholders with a great dividend as I’ve been saying quarter in and quarter out.
We remain confident that the volumes and margin will remain strong in 2024 as we’ve been saying for the last couple quarters, and we are uniquely positioned to capitalize on the next refi boom. Whether it comes next month, six months or in 12 months, we are prepared.
1. Tesla, Inc. (NASDAQ:TSLA)
Share Price Performance Since July 2021 Start: 11.14%
Number of Hedge Fund Investors In Q1 2024: 74
Tesla, Inc. (NASDAQ:TSLA) is the only WallStreetBets stock that is actually in the green since 2021. This is unsurprising, as, during this time, the firm has managed to prove its critics wrong and establish a dominant position in the global EV market through its robust production base. Tesla, Inc. (NASDAQ:TSLA) made 206,421 cars in Q2 2021 and doubled this figure to 433,371 cars in Q1 2024. During that time period, it set up two new factories – one in Germany and another in China. Tesla, Inc. (NASDAQ:TSLA) is also competing in the cutthroat Chinese electric vehicle market, and its heft coupled with a global production base allows it considerable advantages not only over Chinese companies in the Chinese market, but also globally since it can leverage its delivery and supply chains to gain an edge. Additionally, Tesla, Inc. (NASDAQ:TSLA) also benefits from a rather diversified business model that also focuses on energy storage. This business boomed during Q2 2024 when Tesla, Inc. (NASDAQ:TSLA) deployed 9.4GWh of energy storage products which set a new record in its history. The stock gained 20% in the first five days of July on the back of this news, despite the holidays.
Baron Funds mentioned Tesla, Inc. (NASDAQ:TSLA) in its Q1 2024 investor letter. Here is what the fund said:
Tesla, Inc. designs, manufactures, and sells electric vehicles (EVs), related software and components, and solar and energy storage products. Shares fell 29.3% in the first quarter as the core automotive segment is facing headwinds due to a complex macroeconomic environment, factory shutdowns, growing competitive risks in China, and vehicle price reductions which are pressuring gross margins. During the first quarter of 2024, production was also negatively impacted by the Red Sea maritime supply- chain interferences, sabotage in a Tesla factory’s power supply in Berlin, and a factory closure for the launch of the refreshed Model 3. We remain shareholders. Tesla commenced delivery of its highly anticipated Cybertruck pickup, which features new technologies within the car and its manufacturing lines. Tesla also launched version 12 of its Full Self Driving product, which shows significant progress from prior versions and increases the probability that Tesla’s data collection at scale, and verticalized software and hardware approach will position Tesla as a leader in the future for autonomous driving and shared mobility. We also expect energy storage sales to continue to grow over the coming years as the adoption of renewable energy continues. Lastly, we believe Tesla’s core automotive segment will recover with the company remaining a leader in the EV market, which continues to expand with EVs still accounting for only around 10% of vehicle sales globally.
TSLA’s rapid growth over the past years has stunned its biggest detractors. However, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None.
