The Reddit stocks trend remains popular. However, things are running out of steam. “Meme stocks” popular with online traders on platforms like Reddit’s r/WallStreetBets hit jaw-dropping highs back in February. But, in the weeks since, many of the most popular “to the moon” names have fallen back to earth.
Should investors expect a further crash landing? Not so fast! The hype surrounding these names may be fading. But, with the plowing of stimulus checks into the stock market, along with company-specific factors, there may be enough in motion to fuel one last rally for several of the much talked-about Reddit names out there.
One caveat, though: investing in these stocks is still more a gamble than a true investment. If the bottom falls out completely with this investing trend, massive downside risk could be on the table. With this in mind, “tread carefully” is the key word.
So, which Reddit stocks have the potential to surge one more time before it’s all said-and-done? These nine names all look good.
- Allied Esports Entertainment (NASDAQ:AESE)
- Churchill Capital IV (NYSE:CCIV)
- Cinedigm (NASDAQ:CIDM)
- Express (NYSE:EXPR)
- Hall of Fame Resort & Entertainment (NASDAQ:HOFV)
- LiveXLive Media (NASDAQ:LIVX)
- Palantir Technologies (NYSE:PLTR)
- Sundial Growers (NASDAQ:SNDL)
- Zomedica (NYSEAMERICAN:ZOM)
Now, let’s dive in and take a closer look at each one.
Reddit Stocks: Allied Esports Entertainment (AESE)
Other names popular on Reddit have pulled back as of late. But, AESE stock continues to trend higher. What’s behind the rally for this e-sports venue operator? Chalk it up to the buzz surrounding the sale of its World Poker Tour (WPT) tournament business.
As I wrote previously, Allied Esports had a deal in place to sell its legacy poker business. But, Bally’s Corporation (NYSE:BALY), a casino and i-gaming operator, made a $100 million for the whole company — poker unit included. Offering a small premium to its current trading price, it was clear why the company wasn’t too keen on accepting this takeover bid.
Yet, the situation here has gotten a bit more interesting, and beneficial, for AESE stock investors. Amending its prior deal for the divestiture of WPT, the company will now get $105 million, instead of $90.5 million, for the unit. With this deal set to put more money into its coffers, it’s no surprise investors further upwards (from around $2.23 per share on March 8, to nearly $3 now) over the past few weeks.
Could another rally be in the cards? It’s possible. And with substance backing up the online enthusiasm, this remains a meme stock with legs.
Churchill Capital IV (CCIV)
Back in February, Churchill Capital IV was one of the hottest SPAC (special purpose acquisition company) plays out there. With the rumor mill buzzing about it merging with hot electric vehicle (EV) startup Lucid Motors, shares soared from their $10 per share offering price, all the way up to $64.86 per share.
Yet, even after the stock’s tremendous fall back to the low-$20s per share (as retail traders sold on the news of it officially announcing the Lucid deal), there may be room for a partial rebound. Why? As I broke it down on March 29, Lucid continues to be the early-stage EV company with the most potential to give Tesla (NASDAQ:TSLA) a run for its money.
Sure, it’s unclear where EV stocks are heading next. The “EV Mania” we saw in 2020, that stretched into early 2021, has cooled down significantly. But, while some of the hype is no loner on the table, the underlying trends are still in play. So, what could give this stock another boost in the near-term?
Further action by the Joe Biden’s administration regarding vehicle electrification could be a catalyst to send this sector, and CCIV stock, back towards higher prices. Subsequent news about Lucid may also help to put points into the stock, ahead of the deal close. With prospects still bright for the long-term, and factors that could help out shares in the short-term, keep this Reddit stock at the top of your watch list.
Reddit Stocks: Cinedigm (CIDM)
Cinedigm, a relatively small operator in the streaming space, has made many big moves in the past few months. As our own Louis Navellier broke it down March 15, the company’s strong organic growth, coupled with the build out of its content catalog via acquisitions, the company is clearly on the right track.
But, in recent weeks, that hasn’t been the only reason why Reddit investors have remained excited about CIDM stock. The other factor? NFTs, or non-fungible tokens. The latest craze to hit the crypto scene, NFTs are unique digital files like images, which are stored on the blockchain, and can be bought and sold, similar to collectibles or works of art.
Only time will tell whether this is a foolish bubble. Or, the start of a multi-billion, or even multi-trillion dollar asset class. But, speculators aren’t waiting around to see how this trend turns out. Instead, they are betting big on companies with even the slightest exposure to NFTs.
So, how does this relate to CIDM stock? Its a bit of a stretch, but investors have taken this company’s ties to Wizard Brands (OTCMKTS:WIZD), which has launched NFTs, and turned it into a rationale to treat this stock as an NFT play as well. If this “trend” cools, it could mean bad news for the stock. But, with the potential for this craze to carry on in the near-term, it may be enough to send it up to prices way above where it trades today (around $1.86 per share).
Is Express stock a high-risk, but possibly high-return, play on the post-Covid recovery? Or, has the Reddit set bid up this stock to an unsustainable price? That’s the question investors are trying to answer, after this meme stock’s roller coaster ride since the start of 2021.
On the first trading day of the new year, EXPR stock changed hands for under $1 per share. But, at the height of the late January/early February “meme stock madness,” the apparel retailer had soared to prices nearing $14 per share. Pulling back massively in the weeks since, the stock today (at around $4 per share) has shown signs of breaking out once again.
So, what gives this small cap retailer the potential to make one last parabolic move higher? Admittedly, as a Seeking Alpha contributor said in a recent article, this is a big “show me” story. That is to say, Express has made some big promises about its future growth. Especially when it comes to e-commerce sales.
If it starts to deliver on its promises, shares could see a big rip in the near-term. But, if more signs point to it continuing to struggle? A move back to prior price levels seems very likely. However, it continues to be a popular trading vehicle for Reddit speculators. Also, with the stock still being moderately shorted (11.7% of float sold short), there may be room for another “squeeze,” which leaves the door open for another near-term boost.
Reddit Stocks: Hall of Fame Resort and Entertainment (HOFV)
Just like with Cinedigm, the NFT craze, not its operating business, is what has made investors excited about HOFV stock in recent weeks. The company, which operates the Football Hall of Fame in Canton, OH, on March 23 announced a partnership with Dolphin Entertainment (NASDAQ:DLPN) to offer football-related NFTs.
Yet, further developments, such as the one it made March 30, have started to leave speculators underwhelmed. Vague in how this development relates with NFTs, crestfallen traders have sold out big, with the stock down double-digits on the news. But, while it looks to be the beginning of the end for this hot stock, there may be potential for it to have a “dead cat bounce” before it continues its downward trajectory.
How so? The latest news may be taking some of the wind out of it. But, subsequent near-term developments related to its NFT rollout with Dolphin may be enough to entice retail traders back into shares. Yet, if you do decide to take a roll of the dice with this risky name, keep in mind there’s little in the form of underlying value to back its still sky-high valuation.
With a market capitalization of $458.1 million, but projected revenues of just $35 million in 2021, without Reddit enthusiasm, there’s not much to keep shares steady at today’s prices. Tread carefully, but the party may not be over yet with this sports-related NFT play.
LiveXLive Media (LIVX)
Concert streaming and podcast company LiveXLive is another of the Reddit stocks in the right place, at the right time. Again, this has to do with the NFT trend that’s still in its early stages. Shares were already up big in the past six months, prior to this announcement.
But, the news of its move into non-fungible tokens on March 26 briefly sent shares to even higher price levels. That being said, in recent days, LIVX stock has fallen from prices above $6 per share, back towards the $4 per share price level. So, with the NFT news seemingly baked-in, what could fuel one last round of Reddit mania into shares?
Obviously, more news on its move into the token space could help sustain investor interest. Also, with its exposure to the streaming trend, subsequent developments in this area could be sufficient to give the stock another boost. Again, near-term price moves will likely be based on continued hype, rather than this company’s fundamentals.
Like a lot of the names discussed here, LIVX stock has little in terms of assets or profitability to back up today’s valuation. This could mean big downside risk if current trends reverse course. Yet, as said trends remain in motion, consider this another name to keep on your watch list as a short-term opportunity.
Reddit Stocks: Palantir Technologies (PLTR)
Investing trends have clearly been a friend for PLTR stock since last fall. First pushed higher by the “Biden boost,” “meme stock madness” gave shares additional upwards momentum. Pulling back heavily since February, from $45 down to $23 per share now, it may seem that another pullback, towards its direct offering price ($10 per share) may be on the horizon.
But, given this stock trades more on the headlines rather than its fundamentals, further positive news may send Palantir back towards $30 per share. For starters, a major factor that put downward pressure on the stock was heavy insider selling. With this out of the way, demand fueled by online hype could be enough to change its recent downward trajectory.
What specific catalysts could further fuel interest again in PLTR stock? The current situation at the U.S.-Mexico border could create opportunities for this big data firm with deep government ties. Controversy notwithstanding, its past work in this area gives it a leg up in securing additional border security-related contracts.
Outside of headwinds related to its governmental business, news of it winning private sector contracts would also help move things back in the right direction for Palantir shares. While still richly-priced (currently trades for around 25.2x projected 2021 sales), consider this one of the Reddit stocks with the potential for one last big rally.
Sundial Growers (SNDL)
As hopes for full-on legalization in the U.S. have fallen, so has SNDL stock. One of the Reddit stocks with exposure to this possible catalyst, shares in the Canada-based cannabis company have fallen significantly in the past two months. Hitting prices near $4 per share in February, the stock today is back to just above $1 per share.
Yet, even as President Biden still takes a hard stance against legalizing the commercial sale of marijuana in the U.S., that alone may not bring the recent resurgence in pot stock enthusiasm to a screeching halt. As more states (like New York) move to legalize marijuana, trends continue to point to reforms on the federal level.
Legalization itself may not happen this year. Or, next year, for that matter. But, any sort of progress on this issue could bring back speculative interest in this stock. Maybe not to prior highs. Yet, a 50%-100% rebound may not be out of the question.
Given that, even at today’s prices, it’s hype more than substance backing up its valuation, I wouldn’t make this a “bet the ranch” play. But, as interest now has weakened, a small speculative position in Sundial Growers could pay off in the coming months.
Reddit Stocks: Zomedica (ZOM)
For pet healthcare play Zomedica, the rollout of its Truforma veterinary diagnostics system was enough to send this penny stock to the moon. Yet, after being one of the top performing of the Reddit stocks, shares have taken a big dive, from nearly $3 per share, to $1.45 per at the moment.
But, as is the case with many of these speculative names, it’s down, but it may not be out just yet. Sure, it’s debatable whether the company’s growth over the next few years can justify its current $1.5 billion market capitalization. As InvestorPlace’s Dana Blakenhorn put it March 26, this company has too many “known unknowns” and “unknown unknowns” to make it a safe bet.
However, as retail investors continue to trade this on anything but fundamentals, this may not be a deal breaker. Investor sentiment has definitely faded for Zomedica. But, even a small resurgence in enthusiasm may be enough to send it soaring one last time. Before the overall “Reddit stocks” trend finally bites the dust.
With this in mind, a cautious bet on one last rally may be worth the risk. Just keep in mind it’s investor psychology, not the possible commercial success of Truforma, that you’re betting on.
On the date of publication, Thomas Niel did not (either directly or indirectly) hold any positions in the securities mentioned in this article.
Thomas Niel, a contributor to InvestorPlace, has written single stock analysis since 2016.