In this article, we discuss the 10 most popular Reddit stocks to consider. You can skip our comprehensive analysis of these famous stocks, and go directly to Reddit Stock Portfolio: 5 Most Popular Stocks To Consider.
This year financial markets were jolted amid an influx of Reddit-based retail investors who band together to initiate bets on companies and affect the overall direction of the market. David Kostin, a strategist at Goldman Sachs, asserted that households and retail investors will account for an estimated net purchase of $350 billion worth of U.S. stocks in 2021. This, however, represents just 1% of domestic equity market value.
According to a report published by Business Insider, retail investors accounted for nearly 25% of the stock market activity in 2020, up from 10% in 2019. This growth can be attributed to the increasing knowledge of retail investors and their access to investment products through a collaborative platform.
Some of the stocks that Redditors are betting on include, Facebook, Inc. (NASDAQ:FB), Alibaba Group Holding Limited (NYSE:BABA), Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Tesla, Inc. (NASDAQ:TSLA).
Our Methodology:
Let’s analyze our list of the most popular stocks to consider. These companies are selected on the basis of recent trends on Reddit forum WallStreetBets and are ranked according to the number of hedge funds having stakes in each stock. Data of 873 hedge funds tracked by Insider Monkey was used to gauge hedge fund sentiment around each company.
Image by Sergei Tokmakov Terms.Law from Pixabay
Why pay attention to hedge fund sentiment while choosing stocks?
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 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). 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.
Reddit Stock Portfolio: 10 Most Popular Stocks To Consider
10. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: N/A
As the electric vehicle industry is expected to grow at a CAGR of 33.6% by 2027, Lucid Group, Inc. (NASDAQ:LCID) is gaining ground among investors. This September, John Murphy of BofA called Lucid Group, Inc. (NASDAQ:LCID) the Tesla-Ferrari of new EV automakers, while appreciating the company’s innovative and competitive technology. The firm initiated its coverage on Lucid Group, Inc. (NASDAQ:LCID) with a Buy rating and a $30 price target. In July, the company announced that its total Lucid Air reservations are above 10,000.
Like Facebook, Inc. (NASDAQ:FB), Alibaba Group Holding Limited (NYSE:BABA), Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Tesla, Inc. (NASDAQ:TSLA), Lucid Group, Inc. (NASDAQ:LCID) is also one of the notable stocks to invest in.
9. Tilray, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 17
Tilray, Inc. (NASDAQ:TLRY), a Canadian pharmaceutical and cannabis company, benefits from its global reach in medical and recreational distribution.
In Q2, Citadel Investment Group is the largest shareholder of Tilray, Inc. (NASDAQ:TLRY), with shares worth $73.4 million. Overall, 17 hedge funds tracked by Insider Monkey reported having stakes in the company in Q2, compared with 21 in the previous quarter. The total value of these stakes is $94.8 million.
Jefferies Financial Group reiterated its Buy rating on Tilray, Inc. (NASDAQ:TLRY), with a $14 price target.
8. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 21
AMC Entertainment Holdings, Inc. (NYSE:AMC) has been one of the most popular Reddit stocks over the past few months. In the third quarter, the company posted GAAP EPS of -$0.44, beating the Street’s estimate by $0.10. Revenue jumped over 500% in the period.
As of Q2, 21 hedge funds tracked by Insider Monkey reported having stakes in AMC Entertainment Holdings, Inc. (NYSE:AMC), up from 19 in the previous quarter. The total value of these stakes is $404.3 million.
Heartland Advisors mentioned AMC Entertainment Holdings, Inc. (NYSE:AMC) in its Q2 2021 investor letter. Here is what the firm has to say:
“AMC is up a whopping 2,500% since the beginning of the year. Even AMC management seems stunned by the mind-boggling rise in its shares as witnessed by the following quote from a prospectus the company filed to issue more shares.
‘We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last.’
We too don’t believe that prices are tied to valuation metrics for the theater and entertainment company. At current levels, shares of AMC are trading at roughly 63X sales. It’s a steep price for a company that has been losing money for years and isn’t expected to turn a profit in the coming year. No wonder insiders have cashed in on the mania and unloaded over $200 million in stock since March.
While valuations for AMC are an extreme example, speculative fever is running rampant. Investors have been clamoring to pay premium prices in hopes that the current goldilocks moment of low interest rates, easy sales comparisons and low inflation will go on forever. The appetite for pricey unicorns in a quest for quick gains was a drag on performance for your portfolio, and the Fund modestly underperformed the benchmark for the period.
Despite stratospheric valuations in many areas of the market, attractive valuations still exist if you know where to look. A good place to start is among small caps.
Looking at price to sales metrics, as shown below, smaller businesses are trading at discount levels versus their large counterparts not seen since the dotcom bubble. Price to sales is one of the metrics we look at when examining businesses. Over the years, it has served as an effective tool in identifying compelling opportunities when incorporated with other fundamentals.”
7. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 21
This September, Ronald Josey of JMP Securities showed confidence in Upstart Holdings, Inc. (NASDAQ:UPST) as the company gains growth in the personal lending market by utilizing advanced AI tools. The firm lifted its price target on Upstart Holdings, Inc. (NASDAQ:UPST) to $327, while keeping an Outperform rating on the shares.
Upstart Holdings, Inc. (NASDAQ:UPST) showed a positive hedge fund sentiment in Q2, as 21 hedge funds in the Insider Monkey database reported owning stakes in the company, up from 13 in the previous quarter. The total value of these stakes is over $2.1 billion. Dan Loeb’s Third Point was the leading shareholder of Upstart Holdings, Inc. (NASDAQ:UPST) in Q2, with shares worth $1.6 billion.
Vulcan Value Partners mentioned Upstart Holdings, Inc. (NASDAQ:UPST) in its Q2 2021 investor letter. Here is what the firm has to say:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
6. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 26
This August, Wolfe Research raised its price target on Palantir Technologies Inc. (NYSE:PLTR) to $25 while keeping a Peer Perform rating on the shares. The firm’s analyst appreciated the company’s accelerating revenue growth and its strategic investments.
Cathie Wood’s ARK Investment Management is the largest shareholder of Palantir Technologies Inc. (NYSE:PLTR) in Q2, with shares valued at $808.7 million. In addition, 26 hedge funds tracked by Insider Monkey reported owning stakes in the company in Q2, compared with 32 in the previous quarter. The total value of these stakes is $1.36 billion.
Like Facebook, Inc. (NASDAQ:FB), Alibaba Group Holding Limited (NYSE:BABA), Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Tesla, Inc. (NASDAQ:TSLA), analysts and investors are also paying attention to Palantir Technologies Inc. (NYSE:PLTR) in 2021.
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Disclosure. None. Reddit Stock Portfolio: 10 Most Popular Stocks To Consider is originally published on Insider Monkey.
