In this article, we discuss Reddit’s 10 meme stocks ranked from best to worst according to hedge funds. If you want to see more stocks in this selection, check out Reddit’s 5 Meme Stocks Ranked From Best to Worst According to Hedge Funds.
A meme stock is a term used to describe company stocks that have gained widespread popularity through social media platforms due to an increase in social sentiment. This social sentiment is usually due to the increased discussion and analysis around a particular stock by online communities who devote significant resources and research to the stock. Meme stocks are often heavily discussed on platforms such as Reddit, Twitter, and Facebook.
Retail investors are pouring unprecedented amounts of money into US stocks, which could potentially give them more influence over the markets than during the “meme-stock” frenzy two years ago. During that time, many amateur traders drove up the stock prices of various struggling companies, including GameStop Corp. (NYSE:GME), AMC Entertainment Holdings, Inc. (NYSE:AMC), and Bed Bath & Beyond Inc. (NASDAQ:BBBY). However, the current wave of retail investment is more diversified, indicating a renewed interest in the stock market following the losses many investors suffered last year. The influx of retail funds has contributed to a strong market recovery at the beginning of 2023, despite the relatively low level of engagement from professional fund managers.
Vanda Research has collected data that shows that smaller investors have invested an average of $1.51 billion per day in January, which is an exorbitant amount. Similarly, JPMorgan’s data suggests that retail investors were responsible for up to 25% of all stock trading in January, which is a record high. According to Vanda analysts, as cited by Financial Times:
“With recent surveys showing the institutional investor community remaining broadly bearish on stocks, it would be unwise to underestimate the importance of the retail cohort. The bottom line is that investors should heed signals from the ‘unsophisticated money’ crowd.”
Investing platform Public reports that 63% of its investors have spent more time researching stocks in 2023 compared to the same time last year. According to Katie Perry, the general manager of investor relations at Public, the increased interest in researching stocks may be due to a variety of factors. CNN cited Perry on March 1, who said:
“The meme revolution is now an evolution. People are digging in, but there’s a friction where they have trouble getting the information they need.”
Similarly, strategists at VandaTrack wrote in a research note:
“With recent surveys showing the institutional investor community remaining broadly bearish on stocks, it would be unwise to underestimate the importance of the retail cohort. That’s in keeping with retail sales and jobs data for January, suggesting that consumers retain impressive levels of buying power.”
Investors can also check out 10 Reddit Stocks That Are Too Cheap To Ignore, 12 Best Reddit Stocks To Buy, and 11 Best Meme Stocks To Buy.
Our Methodology
We selected the most popular Reddit meme stocks over recent years and ranked them according to hedge fund sentiment, from best to worst (in descending order of hedge fund holders). The higher the number of hedge fund investors, the closer the stock is to the “best” tag. These famous Reddit meme stocks are consensus picks from credible websites including Bloomberg, Forbes, Reuters, and Barron’s. We also scoured subreddits including r/StockMarket, r/WallStreetBets, and r/Investing and picked meme stocks that were most popular over the past few months and years. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022.
Photo by Tech Daily on Unsplash
Reddit’s Meme Stocks Ranked From Best to Worst According to Hedge Funds
10. Rivian Automotive, Inc. (NASDAQ:RIVN)
Number of Hedge Fund Holders: 29
Rivian Automotive, Inc. (NASDAQ:RIVN) was founded in 2009 and is based in Irvine, California. The company designs, develops, manufactures electric vehicles and accessories. On March 6, Rivian Automotive, Inc. (NASDAQ:RIVN) revealed its plan to offer $1.3 billion worth of green convertible senior notes due in 2029 to qualified institutional buyers. These notes will accumulate interest that will be paid twice a year, and they will come to maturity on March 15, 2029, unless converted, redeemed, or repurchased earlier.
On March 10, BofA resumed its coverage of Rivian Automotive, Inc. (NASDAQ:RIVN) with a Buy rating and set a price target of $40, which is a decrease from the previous target of $50.
According to Insider Monkey’s Q4 data, 29 hedge funds were bullish on Rivian Automotive, Inc. (NASDAQ:RIVN), compared to 30 funds in the prior quarter. George Soros’ Soros Fund Management is the largest stakeholder of the company, with 14.3 million shares worth $264.3 million.
Like GameStop Corp. (NYSE:GME), AMC Entertainment Holdings, Inc. (NYSE:AMC), and Bed Bath & Beyond Inc. (NASDAQ:BBBY), Rivian Automotive, Inc. (NASDAQ:RIVN) is one of the top Reddit meme stocks to monitor.
Baron Asset Fund made the following comment about Rivian Automotive, Inc. (NASDAQ:RIVN) in its Q4 2022 investor letter:
“Consumer Discretionary investments along with the lack of exposure to the strong performing Energy sector offset a portion of the above-mentioned gains. Within Consumer Discretionary, the underperformance of electric vehicle (EV) manufacturer Rivian Automotive, Inc. (NASDAQ:RIVN) coupled with lower exposure to this better performing sector hampered relative results. Rivian’s shares fell as investors fretted over the company’s unit economics and how macroeconomic uncertainty is impacting the EV industry.
Rivian Automotive, Inc. is an EV manufacturer producing vehicles for the consumer and corporate delivery van markets. Its shares were under pressure during the quarter. Investors remained focused on the company’s execution challenges, the implied unit economics for its vehicles, and near-term headwinds for the automotive industry stemming from a weaker global economy. Despite these headwinds, we are comfortable with Rivian’s liquidity position and its competitive position within the EV industry, which we believe will continue to grow at impressive rates. Rivian should also benefit from its positive product reviews, its integrated technology approach, and its industry partnerships.”
9. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 28
Palantir Technologies Inc. (NYSE:PLTR) is a Colorado-based company that designs software platforms for the intelligence community in the United States to help in counterterrorism investigations and operations. Palantir Technologies Inc. (NYSE:PLTR) is one of the top Reddit meme stocks according to smart investors.
On March 1, Palantir Technologies Inc. (NYSE:PLTR) experienced a 1% increase in premarket trading after revealing that it had secured a five-year contract with the U.S. State Department. The contract, valued at a maximum of $99.6 million, will allow the Bureau of Medical Services to use Palantir Technologies Inc. (NYSE:PLTR)’s software to monitor the health, safety, and preparedness of State Department staff. This latest agreement adds to Palantir Technologies Inc. (NYSE:PLTR)’s previous work with the State Department, which began in 2017 when the company assisted with HIV/AIDS analysis for the President’s Emergency Plan for AIDS Relief.
DA Davidson initiated coverage of Palantir Technologies Inc. (NYSE:PLTR) with a Neutral rating and an $8 price target on March 1. The firm acknowledges that Palantir Technologies Inc. (NYSE:PLTR) has valuable intellectual property, but its specialized mission and focus might restrict its potential for growth and its capacity to earn. Moreover, the complex and labor-intensive nature of the Palantir product makes it quite costly, which also limits the company’s reach in the market. Additionally, the firm noted that government contracts tend to be sporadic, causing less transparency in terms of future deals.
According to Insider Monkey’s fourth quarter database, 28 hedge funds were long Palantir Technologies Inc. (NYSE:PLTR), compared to 35 funds in the last quarter. D E Shaw is the biggest position holder in the company, with 12.6 million shares worth $81 million.
Here is what Tao Value has to say about Palantir Technologies Inc. (NYSE:PLTR) in its Q4 2021 investor letter:
“We have no new position this quarter and have made below changes to our portfolio. We also sold Palantir (PLTR) as I identified it subject to high retail bubble risk (using above method) and are not part of our core “Mindful Compounder” holdings.”
8. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 25
SoFi Technologies, Inc. (NASDAQ:SOFI) was founded in 2011 and is headquartered in San Francisco, California. The company provides financial services and it operates through three segments – Lending, Technology Platform, and Financial Services. SoFi Technologies, Inc. (NASDAQ:SOFI)’s fourth-quarter results surpassed the predictions of Wall Street and its projections for adjusted EBITDA in 2023 were greater than the general consensus. This is because the fintech firm is still drawing in fresh customers for its monetary offerings. It is one of the best Reddit meme stocks to monitor.
On February 15, Mizuho analyst Dan Dolev raised the firm’s price target on SoFi Technologies, Inc. (NASDAQ:SOFI) to $9 from $6 and maintained a Buy rating on the shares. The analyst presented a positive “blue-sky scenario,” in which SoFi could surpass the upper range of its $1.925 billion to $2.0 billion revenue guidance for 2023. This is due to an expanding gap between the rates at which the company lends and borrows, with the increased use of low-cost customer deposits playing a significant role. According to the analyst’s research note, SoFi Technologies, Inc. (NASDAQ:SOFI)’s lending business being perceived as “opaque” has deterred tech investors who avoid lenders and have a limited understanding of banks.
According to Insider Monkey’s fourth quarter database, 25 hedge funds were bullish on SoFi Technologies, Inc. (NASDAQ:SOFI), and Silver Lake Partners held the biggest position in the company.
In its Q4 2021 investor letter, Altron Capital Management, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ:SOFI) was one of them. Here is what the fund said:
“We have been building our position in SoFi over the last two quarters but have not yet written about our thesis until now. SoFi Technologies, Inc. (NASDAQ:SOFI) is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflexion. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings.
While SoFi is not the only online banking platform out there, we believe it could take a decent share of the financial services market. Banking is a notoriously sticky business, as the inconvenience and hassle of switching banks prevent consumers from jumping to competitors regardless of cost. This is one of the reasons that traditional banks are one of the few businesses to have truly been disrupted by technology. We think SoFi is well on its way to changing that and creating a new paradigm for the future of consumer banking and financial services (read more)
7. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 23
AMC Entertainment Holdings, Inc. (NYSE:AMC) operates in the movie theater industry through its various subsidiaries. The company owns, manages, and has stakes in theaters in the United States and Europe. It was established in 1920 and has its headquarters located in Leawood, Kansas. On March 3, AMC Entertainment Holdings, Inc. (NYSE:AMC) received backing from influential proxy adviser ISS for its proposal to increase its shares and conduct a reverse stock split, which has sparked disagreement among investors. The movie theater chain intends to convert several of its AMC Preferred Equity units into common stock and implement a 1-for-10 reverse stock split to enhance its financial position and decrease its debt through a $110 million raise. ISS has now endorsed this plan. AMC Entertainment Holdings, Inc. (NYSE:AMC) is one of the most prominent Reddit meme stocks to watch.
According to B. Riley analyst Eric Wold’s research note, AMC Entertainment Holdings, Inc. (NYSE:AMC) has submitted a proxy to the Securities and Exchange Commission outlining two proposals necessary to convert its preferred equity (APE) units to common shares. As APE unit holders control 64% of combined holdings and might not have another chance to extract value from those units, the analyst anticipates that the proposals will pass, allowing the company to benefit from a significant equity raising opportunity in the future. This move could help AMC Entertainment Holdings, Inc. (NYSE:AMC) eliminate all its balance sheet debt as the exhibition industry continues to recover and enable management to explore more diversification options for further growth within the broader media industry. Despite the potential for a “positive convergence trade” into the mid-March vote, B. Riley maintained a Neutral rating on the shares with a $4.50 price target on January 30.
According to Insider Monkey’s Q4 data, AMC Entertainment Holdings, Inc. (NYSE:AMC) was part of 23 hedge fund portfolios, compared to 17 in the last quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 3 million shares worth $12.3 million.
Here is what Bronte Capital Amalthea Fund has to say about AMC Entertainment Holdings, Inc. (NYSE:AMC) in its Q1 2022 investor letter:
“We are short, in small quantities, 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 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 is an over-levered chain of movie theaters 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. Lucid Group, Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 17
Lucid Group, Inc. (NASDAQ:LCID) specializes in technology and automotive services, specifically in the field of electric vehicle technologies. The company is involved in the design, engineering, and construction of electric vehicles, EV powertrains, and battery systems. Lucid Group, Inc. (NASDAQ:LCID) was established in 2007 and is located in Newark, California. On February 22, the company reported Q4 GAAP loss per share of $0.28, beating market estimates by $0.14. The revenue of $257.7 million missed Street consensus by $15.89 million. Lucid Group, Inc. (NASDAQ:LCID) reported that 3,493 vehicles were produced in Q4, up 53 percent sequentially, and the quarter ended with approximately $4.9 billion in total liquidity.
On March 2, Citi analyst Itay Michaeli reiterated a Buy recommendation on Lucid Group, Inc. (NASDAQ:LCID) but lowered the firm’s price target on the shares to $11.50 from $12. The analyst revised the firm’s model following the release of Q4 results. Michaeli noted that Lucid Group, Inc. (NASDAQ:LCID)’s “soft” 2023 outlook raised concerns about reservation demand in the short term, which may be attributed to last year’s delayed production ramp, supply-demand imbalances, and slower brand building momentum. However, the company is taking steps to address these issues. The good news is that Lucid’s production constraints have mostly been resolved, according to Citi.
Among the hedge funds tracked by Insider Monkey, 17 hedge funds were bullish on Lucid Group, Inc. (NASDAQ:LCID) at the end of December 2022, compared to 15 funds in the prior quarter.
In addition to GameStop Corp. (NYSE:GME), AMC Entertainment Holdings, Inc. (NYSE:AMC), and Bed Bath & Beyond Inc. (NASDAQ:BBBY), retail investors and Wall Street money managers are keeping tabs on Lucid Group, Inc. (NASDAQ:LCID) amid the meme stock frenzy.
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Disclosure: None. Reddit’s 10 Meme Stocks Ranked From Best to Worst According to Hedge Funds is originally published on Insider Monkey.
