Meme stocks are a dangerous game; you can either get rich quick or go broke even faster. They’re known for capturing attention online and going viral before their market price reflects anything close to reality. But when do they end up becoming popular, lucky investors might be able to ride the wave all the way to its peak.
As a result, novice investors enter the markets in droves to see if they can make quick profits. And these new participants lack experience with market fluctuations and riskier stocks, which has far-reaching implications for investing as a whole.
Notwithstanding, before we delve further into these stocks, keep one thing in mind — do not allocate a substantial amount of your savings to these stocks. Undoubtedly, they will pop on Reddit interest in the coming weeks and months. But these rallies, in many cases, will not be sustainable. So it’s important to time your exit and entry positions very well.
Some of the stocks on this list are more familiar than others. But all of them have one thing in common: Redditors love them. With that being said, here are seven meme stocks with potential for huge gains:
- Beyond Meat (NASDAQ:BYND)
- Tesla (NASDAQ:TSLA)
- Nokia (NYSE:NOK)
- AMC Entertainment (NYSE:AMC)
- ContextLogic (NASDAQ:WISH)
- Palantir Technologies (NYSE:PLTR)
- Vinco Ventures (NASDAQ:BBIG)
Meme Stocks: Beyond Meat (BYND)
Beyond Meat is a startup that produces plant-based meats in the form of sausages, hamburgers and hotdogs. The company’s founder wanted to create products with similar textures as traditional meat counterparts, but using plants instead.
The success of the company since its launch in 2009 is due to its innovative approach. It offers plant-based substitutes for a variety of meats, including beef, pork and chicken. But perhaps the biggest reason for bullishness is the pivot we see towards healthy eating.
Millennials and Generation Z have been interested in healthy foods for a while, and are increasingly willing to try vegan or vegetarian options. Hence, they are up for spending more money on fitness, healthy food and self-care compared to older generations.
Consequently, Beyond Meat’s products can be a major player in the meat industry. However, these products currently represent less than 1% of an addressable market of $1.2 trillion, according to UBS estimates. With sales at current levels being about as much as what other players are bringing together, it seems inevitable that plant-based foods will start taking over.
However, the company still needs to deliver on its potential. According to CNBC data, it has reported four quarterly earnings misses in a row. If it starts developing fundamental strength, this will become a very enticing prospect.
Until recently, the $800 mark was a tough level of resistance for Tesla shares. There’s no clear indication as to why that was, other than potential supply chain issues. however, since then, the stock has risen to levels above $900 after a strong third-quarter earnings report.
Tesla’s recent success has been largely due to the company’s ability to navigate a global semiconductor shortage and produce more cars than investors expected. In Q3 alone, it delivered more than 240,000 vehicles — 10,000 more than what analysts expected. So far this year, Tesla surpassed 627,000 deliveries, which is up considerably from the comparable period last year.
Tesla has also been making progress on its self-driving car technology. Last month, the company started using Tesla-calculated safety scores to qualify drivers for the latest autonomous driving software.
Fully self-driving cars are not on the immediate horizon. Even with the driver assistance feature, drivers still need to remain alert on the road. But this is a move in the right direction, and Tesla stands to gain handsomely by being a leader in this space.
Meme Stocks: Nokia (NOK)
It goes without saying that a few decades ago, the world was a much different place. Many people still used traditional methods of communication, like paper documents in an office, fax machines or voicemail. Mobile phones were a game-changer, and Nokia’s products were at the forefront of this communication revolution.
However, despite its early success in the cell phone business, Nokia is a cautionary tale. It famously lost the battle for cell phone supremacy with Apple (NASDAQ:AAPL) and could never mount a comeback.
But things have changed quite substantially. Nokia is now firmly a 5G play.
For those following the Nokia comeback story, it is remarkable. Much of the credit has to go to Pekka Lundmark, current President and CEO of Nokia, and his leadership team. He led them in an aggressive pursuit of 5G partnerships and deals, which resulted in rapid, substantial increases in Nokia’s market share.
The recent quarterly results are a testament to the progress made. If it manages to maintain its momentum, NOK stock will be an industry leader for some time to come. That makes it one of the rare meme stocks that are not trading on retail momentum alone. Despite the recent surge, shares are trading at just 14.9 times forward price-to-earnings.
AMC Entertainment (AMC)
AMC Entertainment has been around for generations. Although it remained profitable for quite some time, it has struggled because of changes in the industry. Ticket sales have suffered as streaming entertainment grows in popularity.
The coronavirus pandemic added insult to injury, as lockdowns and stay-at-home orders led to theater closures and plummeting revenue. But Redditors managed to breathe new life into the company, and AMC has not looked back. Despite equity issues, it has strengthened its balance sheet and staved off any prospects of bankruptcy.
Meanwhile, theaters have reopened, and new releases are helping investor sentiment. No Time To Die, which features Daniel Craig’s final appearance as James Bond, and Venom: Let There Be Carnage are finally turning the tide. Both the films have done exceptional business in North America.
Additionally, AMC has inked an agreement with Warner Bros., giving them exclusive rights to show movies for 45 days before they are released on DVD or streaming services in 2022. In response to the pandemic, Warner Bros. had decided to simultaneously debut its 2021 films in theaters and on streaming services in the U.S. This shift is a welcome development for AMC stockholders.
It’s also worth noting AMC is one of the first meme stocks ever. Alongside GameStop (NYSE:GME), this company has a history with Redditors now. Several times this year, it looked like these two were down for the count. But Reddit’s r/WallStreetBets forum came to the rescue every time.
Meme Stocks: ContextLogic (WISH)
Millennials may be the most sought-after demographic for marketers and advertisers, but many businesses are left wondering how to attract this group to their brands. However, ContextLogic is looking to draw in this lucrative segment by targeting the budget-conscious consumer.
The approach makes a lot of sense. The ContextLogic platform provides a new way to deliver high-quality products at affordable prices.
The company’s personalized product feed enables users to discover products by scrolling through its mobile application and browsing. The discovery-based shopping platform connects merchants’ products based on preferences to purchase goods more conveniently.
Due to this novel approach, it became one of the world’s largest mobile e-commerce platforms last year. In 2020, monthly active users (MAUs) jumped 19% over the previous year. Additionally, over the past four years, ContextLogic’s revenues have more than doubled from $1.1 billion in 2017 to a whopping $2.83 billion for the 12 months ended June 30.
However, the latest earnings report showed things are slowing down. As people return to pre-pandemic activities, they are spending less time on the ContextLogic’s app. The company has also pulled back on advertising, which has resulted in slower subscription growth. However, the business model is strong enough to withstand the occasional hiccups.
Palantir is a game-changing software company. It provides tools to governments and businesses alike to process data for better decision-making.
Palantir’s three major projects include Gotham, Metropolis and Foundry. The company can protect data and track down cybercriminals like never before with its open-source intelligence toolset available on both web applications.
Gotham is a uniquely powerful and versatile tool used by counterterrorism analysts in the Department of Defense and other agencies.
Meanwhile, Metropolis is software for data integration, information management and quantitative analytics. The program uses datasets to discover trends and relationships with predictive mathematics or machine learning algorithms. Organizations can use it to gain better insight into their customers’ needs.
Lastly, Foundry is dedicated to commercial clients. It also has several high-profile customers, but has been in the news because of its controversial relationship with the U.K.’s National Health Service.
Due to its close relationship with the defense industry, Palantir has become the subject of considerable public scrutiny. But as a rule of thumb, when it comes to national defense, it is all hands on deck. There will be ups and downs, but this is a very solid big-data company worth a large chunk of your portfolio.
Meme Stocks: Vinco Ventures (BBIG)
Vinco Ventures is the sum of many parts. The digital media and content technologies acquisition group combines the best of blockchain and ByteDance’s TikTok.
The company owns a fun, interactive application that is looking to be the next big thing in video-sharing. Additionally, it ventured into NFTs via Emmersive Entertainment, which split off earlier this year. All of this has caused BBIG stock prices to skyrocket — investors want in on what could be a profitable business venture.
However, the problem for many will be deciding whether Vinco Ventures is just hopping on the bandwagon with the latest trends. Several companies want to play the hottest investment fads for short-term gains. After making these announcements, their stock shoots to the moon, the companies issue equity and they gain enough cash to finance future operations.
It is too early to tell where Vinco Ventures will end up. Remember the golden rule of investment: Never invest money that you can’t afford to lose. That especially applies in the case of BBIG stock.
On the publication date, Faizan Farooque 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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.