Reddit’s r/WallStreetBets 10 million strong members have changed stocks and investing. Regardless of my thoughts or anyone else’s, that’s simply true. It is clear that a much broader age range has access to the stock market today than at any time in the past. With all of the chatter suggesting that the earlier one learns to invest the better, I’d argue that forums like r/WallStreetBets are ultimately a good thing. The rise of “Reddit Stocks” can certainly be seen as a misnomer for a new generation of investors looking to learn the market.
At the same time, there has been lots of questionable investing rooted in nothing more than “to-the-moon” logic on Reddit. Nevertheless, it’s an evolving platform and I imagine that it will become more sophisticated in terms of the advice offered there as time passes.
As a matter of fact, there seems to be a shift toward more traditional investing advice. That’s why stocks listed below are gaining more clout than in the past.
- Apple (NASDAQ:AAPL)
- Nvidia (NASDAQ:NVDA)
- Tesla (NASDAQ:TSLA)
- Airbnb (NASDAQ:ABNB)
- Alibaba (NYSE:BABA)
- Best Buy (NYSE:BBY)
- DraftKings (NASDAQ:DKNG)
Reddit Stocks: Apple (AAPL)
Despite the tech sell off which has decreased Apple’s stock price, there is plenty of reason to believe in its ability to bounce back. I’d assert that it’s foolish to bet against it in the longer term. Another way of saying that is that I believe bearish theories about the tech giant are overblown. I’d say that this is a buy-the-dip opportunity in one of the great FAANG stocks.
Aside from the tech sell off, there are other reasons that AAPL stock has faltered in 2021. The primary thesis against Apple is that its spectacular first-quarter earnings and very strong Q2 earnings are simply a result of the pandemic. Therefore, analysts believe that the company can’t maintain that trajectory and some speculate that evidence will begin to surface late this year.
InvestorPlace Strategic Trader editors John Jagerson and Wade Hansen “feel that fears about inflation and higher interest rates are overblown right now, which has kept technology companies undervalued.” They believe that Apple will not trade below $123 through June, which should reassure investors at AAPL stock’s current prices.
Now is a good time to go contrarian and avoid the fear around tech. It should also embolden investors that Wall Street has an average stock target price of $157.10 for Apple shares currently. There’s clearly a lot of potential upside now.
It seems that Redditors have finally started to talk about semiconductor stocks with a bit more regularity. Given the company’s strong May 27 Q1 earnings report now may be the time to get in. NVDA stock rocketed upward by about $30, from $619 to $649, on the news. That doesn’t mean though that share prices won’t rise in subsequent days as the news reverberates through the industry.
In any case, the news was good and Nvidia remains a strong stock to consider whether Reddit gives it love or not. The Santa Clara, California company beat guidance suggesting it would report $5.41 billion in quarterly revenue. Its strong $5.66 billion posting is a positive. It also posted earnings per share of $3.66, far oustripping projections of $3.28
There will certainly be some profit taking, but the longer term picture suggests that Nvidia is a strong play. Its data center strategy is paying dividends, in the figurative sense, and witnessed a 79% increase in revenue.
Reddit Stocks: Tesla (TSLA)
Currently trading for $633, Tesla stock is still pretty far from where it began in 2021. In exact terms it’s about 15% below where it started in 2021. But there’s plenty of recent news which should excite investors that makes a purchase of Tesla worthwhile.
Actually, it’s probably fairer to say that Tesla’s most recent earnings report provided reason for optimism and pessimism at once. Earnings per share of 93 cents outpaced expectations of 79 cents. Further, Tesla’s $10.39 billion in revenue eclipsed expectations by $100 million. Not only did revenues surpass expectations, they also grew by 74% from the same period a year earlier.
However, long repair wait times – due to slow service center growth – and continued chip concerns caused shares to falter on the news.
Tesla also believes its computer vision system is closer to achieving full autonomous driving than alternative systems. Tesla revealed that “Beginning with deliveries in May 2021, Model 3 and Model Y vehicles built for the North American market will no longer be equipped with radar.”
This is testament to its belief, which ran counter to that of most of the industry, that computer vision will lead to vehicle autonomy first. If Tesla achieves that first, its shares will have another reason to hit new heights. It is believed that Tesla’s new systems will achieve as high as level 4 autonomy, with 5 being fullest autonomy.
Airbnb recently released earnings which showed that it is now exceeding its performance of last year. Revenue was up $45.1 million, to $886.94 million year-over-year. This is a strong indicator given that the majority of Q1 ‘21 was dominated by severe pandemic protocols, while the same cannot be said of Q1 ‘20.
Further, the U.S. is beginning to open up quickly as 40% of the adult population has been fully vaccinated. This should only increase Airbnb’s domestic business prospects in the immediate future.
However, the news wasn’t all good. The pandemic clearly multiplied losses for the company which saw its Q1 ‘20 net loss of $340.6 million spike to $1.172 billion in Q1 ‘21.
Nevertheless, ABNB stock is now in a better place than it was months ago. The stock represents a play on economic reopening. While risky, and unproven, Airbnb is a solid choice with strong upside.
Reddit Stocks: Alibaba (BABA)
Right now, there’s every reason to be cautious regarding BABA stock. Globally, technology stocks have slid in recent months as valuation concerns persist and investors rotate into more traditional, old-economy businesses and stocks. That broad trend has pulled Alibaba down in price.
Domestically, Chinese regulators have pushed back hard on fintech companies in order to contain what the country believes could be real risks to the financial market by such companies. Alibaba, and its Ant Financial were the poster boys for this backlash.
Further, the Chinese ecommerce landscape is evolving and competition is increasing. The competitive landscape includes strong -commerce players including Pinduoduo (NASDAQ:PDD) and JD.com (NASDAQ:JD) who are arguably more focused and agile.
The current situation could represent a real turning point for Alibaba. I wouldn’t be surprised to see the company divest some of its non-core businesses and further define exactly what its business is. In that case, Alibaba is a strong contrarian pick right now with tons of upside.
Best Buy (BBY)
There’s good news for those at the intersection of r/WallStreetBets and dividend investing. That news is that Best Buy just announced a 70 cent quarterly dividend. That dividend will be payable on July 8 and represents a few positive factors for the company. Firstly, the dividend will potentially serve to draw in investment capital as the pivot away from growth and tech stocks persists. Secondly, it signifies a large jump in Best Buy’s dividend. That dividend was 55 cents in each quarter of 2020. It is also the company’s largest dividend on record.
Another strong catalyst for Best Buy is simply the reopening. Best Buy is struggling with supply chain issues, but sales are growing. CEO Corie Barry explained that “unprecedented demand and production disruptions have made it harder to get items such as large appliances and televisions. Still, comparable sales shot up 37% during the company’s quarter that ended earlier this month as it worked to navigate supply-chain challenges and collaborated with vendors to bring in inventory.”
Reddit Stocks: DraftKings (DKNG)
There’s a solid argument to be made that as the economy opens up, more consumers will be eager for in-person casino and betting entertainment options. That would ostensibly cut into a piece of DraftKings’ market. While I’d agree with the assertion that people will flock toward in-person gambling venues when they can, I’d also assert that DraftKings is on an upward trajectory regardless.
DraftKings is betting as much with the release of its latest company guidance in its earnings report. Company CFO Jason Park noted that the company had tightened and increased its revenue guidance for fiscal year 2021. Prior to its most recent, strong earnings report, DraftKings set a range of $900 million to $1 billion in revenue for the period.
That guidance has been updated to a range of between $1.05 billion to $1.15 billion. In Q1 DraftKings launched betting in Michigan and Virginia and now offers online betting across 12 states, representing 25% of the population.
Although DraftKings is a well-known name in the space, the space itself is very young and growth remains.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.