3 Reddit Stocks Celebrating 10 Million Users at WallStreetBets

Reddit stocks - 3 Reddit Stocks Celebrating 10 Million Users at WallStreetBets

Source: shutterstock.com/Luca Lorenzelli

Social media has the power to mobilize crowds but few have commanded the same influence as WallStreetBets over the so-called Reddit stocks. The Reddit forum is perhaps most well-known for being the driving force behind the GameStop (NYSE:GME) saga. Investors on the platform rallied together and pushed GME stock price up a whopping 1700%. This explosive surge came as a shock to many, but also showed the power of social media in influencing market movements.

Although the GME price rally put WallStreetBets on the map, the Reddit forum has been building momentum throughout the pandemic. A combination of favorable market conditions and stimulus checks led many to put their money in stocks. For investors (especially new ones), WallStreetBets became a meme-fueled haven as its participants geared up to take on the big guys. The platform is now a dominant force in the world of retail investing with its bold bets on get-rich-quick stocks.

As the forum closes in on 10 million members, here’s a look at 3 Reddit stocks celebrating this milestone.

  • GameStop (NYSE: GME)
  • Tesla (NASDAQ:TSLA)
  • MicroVision (NASDAQ:MVIS)

Reddit Stocks: GameStop (GME)

GameStop Stock: Is The Tide Turning For GME Stock?

Source: Shutterstock

First up on the list is GameStop, the stock that saw a mind-boggling rally as a result of WallStreetBets. Here’s the short version of what went down. Large institutional investors bet against GameStop because physical video games (GME’s core business) was overshadowed by online games. This practice of betting against a stock is called short-selling, where investors gain if the stock price goes down.

However, the institutional investors underestimated the growing power of day traders on WallStreetBets. Amateur traders on the online forum, fueled by rocket emojis and memes rallied together and pushed GME stock to new highs. They believed in GME’s long-term potential despite dwindling sales. By the end of January, short-sellers lost $5 billion from their position in GameStop.

The GME rally is a lesson in action of what happens when a meme becomes a stock. And while shares are down from their catastrophic highs, WallStreetBets continues to have a strong grip over its price movements. Thanks to the power of retail investors, GameStop was able to secure funding and is in the process of making the shift to e-commerce. This month, it raised $550 million to spearhead this transformation.

With WallStreetBets hitting 10 million members, GME stock has plenty of reasons to celebrate. However, it’s worth noting that meme stocks like this one are highly volatile. Investors should hold off on taking the plunge until GameStop takes actionable steps to grow its position in the gaming market.

Reddit Stocks: Tesla (TSLA)

Tesla (TSLA) Motors Assembly Plant in Tilburg, Netherlands.

Source: Shutterstock

Another Reddit stock that receiving a lot of attention from WallStreetBets is Tesla. The sheer potential of electric vehicles has many investors bullish on the top names in the sector. Leading this trend is Tesla and its founder Elon Musk. Musk is no stranger to the “meme culture” and was the driving force behind Dogecoin’s (CCC:DOGE-USD) incredible rally this year. Now, Tesla ranks among Reddit investors’ top favorite stocks on the WallStreetBets forum.

Following an upward streak in 2020, Tesla shares cooled considerably in 2020 as the EV frenzy died down. However, investors on Reddit believe that shares of the company have room to go much higher. In its previous quarter, Tesla reported a 46% increase in sales but deliveries dipped as supply chain issues continue to plague the company. Nonetheless, TSLA stock is said to have the highest comment volume on WallStreetBets. And its 10 million-member certainly helps Tesla’s position in the market.

According to analysts at Barclays, the price movements of TSLA stock have a real correlation to mentions on WallStreetBets. According to the bank “memes can matter much more for Tesla share performance than actual financial metrics.” While this is true, it’s worth noting that TSLA still offers a strong value proposition. The company is entering new markets, investing in new AI technology and is working on an economical electric vehicle.

Given the future tailwinds, I’d say this Reddit stock is a buy on the current dip.

MicroVision (MVIS)

Concept image of a self-driving car lidar system.

Source: temp-64GTX/Shutterstock.com

MicroVision is what many are referring to as the next GameStop. The stock of the little-known tech company based in Seattle experienced a major price surge in the last couple of months. MVIS is up a whopping 1230% this past year. The recent rally is largely the result of positive sentiments towards the stock on WallStreetBets. Notably, MVIS is among the most-mentioned stocks on the subreddit.

There are a couple of reasons that could explain MicroVision’s support from WallStreetBets. Reddit investors have a history of betting on heavily shorted stocks like GameStop and Ihor Dusaniwsky of S3 Partners had this to say. “[MVIS] continues to be one of our top short squeeze candidates as it is a crowded short with short sellers down significantly in mark-to-market losses over the last month.”

Adding to this, investors are optimistic about the company’s lidar sensors, which could be a gamechanger for autonomous vehicles.

Although MicroVision stock price is up significantly, the surge is purely meme-driven, with many touting it as YOLO stock. Fundamentally speaking, however, the company reported a steep quarterly loss and low sales in the last quarter. MicroVision’s lidar sensors could potentially generate returns, but at this moment there is little evidence for long-term growth. Nevertheless, WallStreetBets’ 10 million users is good news for this Reddit stock.

On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for Investor Place since 2020.

Article printed from InvestorPlace Media, https://investorplace.com/2021/05/3-reddit-stocks-celebrating-10-million-users-at-wallstreetbets/.

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