The year 2021 will be remembered for a lot of things, including the rise of Reddit stocks on Wall Street. This refers to the meme stock craze that began when retail investors who congregate on the r/WallStreetBets Reddit message board decided to take on professional short sellers and push up the prices of some of the most widely shorted stocks on Wall Street.
Overnight, phrases such as “To the moon!” and “diamond hands” seemed to enter the popular lexicon and a whole new way of approaching investing was born. While the meme stock craze has cooled off and most of the stocks that were pushed up to dizzying heights have since come back to Earth, several of the more popular Reddit stocks remain much higher than where they were a year ago.
So, as we begin a new year, let’s take a few minutes to look back at the top four Reddit stocks of 2021.
Now, let’s dive in and analyze each one a bit closer.
Top Reddit Stocks of 2021: AMC (AMC)
It had peaks, valleys and plenty of drama, but investors who bought shares in struggling movie theater chain AMC last January have done alright.
Despite a topsy turvy Reddit-inspired run throughout 2021, shares of AMC are up 1,052% over the past 12 months, making the stock one of the very best performers of last year and a leader among the meme crowd. The rally that has taken AMC stock to its current level of $22.80 is especially impressive when you consider that the company’s shares began 2021 valued at less than $2. In fact, Wall Street was so down on AMC and its prospects during the pandemic that one analyst put a price target on the shares of 1 cent.
Yet, the Reddit crowd proved the naysayers wrong, pushing the price of AMC stock as high as $72.62 in June of last year, giving it a gain at its peak of 3,568%. While the share price has since come down about 65%, it continues to defy market expectations. The median price target on AMC shares is currently $6, implying that they could decline a further 74% from current levels. While critics of the Leawood, Kansas-based movie theater chain persist, there are reasons to be optimistic for the company and its stock. A slate of new films released over the recent holiday period, such as Spider-Man: No Way Home and Sing 2 have brought people back to movie theatres and set records.
GameStop (GME)
Now, we come to the meme stock that started it all. Shares of the bricks-and-mortar video game retailer are well below their peak last year of $483. However, GME stock remains up 660% over the past year. This time last year, GameStop stock was changing hands at $17. Now, shares are worth $132 and continue to remain far higher than what Wall Street thinks the stock is worth. Only three analysts currently have a price target on GameStop shares and the consensus view is that they should be trading at $45 each, which would be a 66% decline from where the stock currently sits.
Overall, investors who continue to hold onto GME stock defiantly point to the company’s turnaround efforts and plans to move away from retail outlets and become more of an e-commerce company. GameStop Chairman Ryan Cohen talks of making the company the “Amazon of gaming.”
How successful GameStop’s metamorphosis will be remains a question mark. But who can forget all the excitement this company and its stock provided us while we were hunkered down for the pandemic last year? Roaring Kitty, “To the moon!,” diamond hands and even some entertaining congressional testimony. No matter where the share price goes from here, GameStop is one stock that will live on in infamy.
Top Reddit Stocks of 2021: Avis Budget Group (CAR)
At first look, a car rental company appears to be outside the wheelhouse of the Reddit investing crowd. But that didn’t stop determined retail investors from pushing the share price of the parent company of Avis and Budget car rental up sharply over the past year.
At one point in 2021, CAR stock rose from $36 per share to $545.11, for a gain of 1,414%. Now, the share price sits right around $200 and remains 454% higher than where it was in January 2021. The huge run-up made Avis Budget Group one of the top-performing industrial stocks of last year. And unlike the other stocks on this list, analysts forecast more gains ahead for Avis Budget Group.
Currently, the median price target on CAR stock is $221, implying that the shares could run 11% higher in the coming months. The reason Wall Street remains bullish on Avis Budget Group even though it’s been treated as a meme stock is that the company is benefitting from a resurgence in car rentals, fueled by a recovery in travel coming out of the global pandemic. The company blew away expectations for its third-quarter earnings, reporting $10.74 in per-share earnings, which was more than $4 above analysts’ expectations. Additionally, Avis Budget also announced a $1 billion share buyback program that has attracted investors.
Upstart Holdings (UPST)
San Mateo, California-based Upstart Holdings is not a household name. The company uses an artificial intelligence platform and non-traditional variables such as education and employment to predict a person’s creditworthiness and then shares this information with banks and credit unions that use it in their consumer loan departments. However, the obscure nature of Upstart Holdings business didn’t prevent Reddit investors from targeting UPST stock for a massive run-up in 2021. While Upstart Holdings share price has skyrocketed and crashed back to Earth, it currently trades at just more than $122 per share, which is 152% higher than where it was 12 months ago.
And despite the exceptional run, Upstart Holdings is another stock that analysts expect to run even higher over the course of 2022. A lot higher. The 10 analysts who cover UPST stock have a median price target on the shares of $287.50, which would be 135% higher than today. The low price target on the stock is $160, which is 31% higher than the current share price.
Let’s put this into perspective a bit: This is for a stock that started 2021 with a price of $48.37. Therefore, Wall Street clearly sees rising demand for the consumer loan services provided by Upstart Holdings. While the Reddit crowd has abandoned this stock, there might be reasons for investors to keep Upstart Holdings on their watchlist.
On the date of publication, Joel Baglole 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.
