In this article, we discuss the 10 new stocks Reddit’s WallStreetBets is buying.
Internet platform Reddit became perhaps the single most disruptive force at the stock market this year as retail investors use the forum to strategize and discuss investments. The company recently released yearly statistics that outline how far the platform has come in the past twelve months. According to data released by Reddit, there are over 100,000 communities on the platform inhabited by 430 million users. So far this year, there have been 366 million posts on Reddit and over 2.3 billion total comments.
The most interesting thing about the yearly review is that the three most popular posts on Reddit all feature on the WallStreetBets forum. The forum, which has more than 11.3 million members, is the platform of choice for retail investors who famously utilized it for the GameStop and AMC Entertainment short squeezes earlier this year. Institutional investors like hedge funds, which took a multi-billion dollar hit from the short squeezes, have been monitoring the platform since to stay one step ahead of the game.
Some of the stocks presently trending on Reddit include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), among others discussed in detail below.
Photo by Adam Nowakowski on Unsplash
Our Methodology
These were selected based on the hype around the companies on the WallStreetBets forum. The analyst ratings and business fundamentals of each stock are also discussed to provide readers with some informed context for their investment choices. Hedge fund sentiment was included as a classifier as well.
The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
New Stocks Reddit’s WallStreetBets is Buying
10. MicroVision, Inc. (NASDAQ:MVIS)
Number of Hedge Fund Holders: 6
MicroVision, Inc. (NASDAQ:MVIS) makes and sells lidar sensors used in automotives. The stock has returned more than 150% to investors over the past twelve months, primarily due to retail investor interest in the company.
MicroVision, Inc. (NASDAQ:MVIS) recently beat market expectations on earnings per share for the third quarter by $0.03. The revenue over the period was up 16% year-on-year. The firm said that the cash used in operations between June and September was up $7 million year-on-year.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in MicroVision, Inc. (NASDAQ:MVIS) with 1 million shares worth more than $12 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), MicroVision, Inc. (NASDAQ:MVIS) is one of the stocks attracting the attention of retail investors.
9. BlackBerry Limited (NYSE:BB)
Number of Hedge Fund Holders: 20
BlackBerry Limited (NYSE:BB) provides security software and related services for enterprise clients. BlackBerry Limited (NYSE:BB) recently announced that it had partnered with analytics firm Deloitte to help companies secure their software supply chains through mission-critical applications.
BlackBerry Limited (NYSE:BB) stock has rallied in the past five days as interest in the company on the WallStreetBets forum translates into real-time interest in the stock at the market, propelling a mini-rally rally in the share price.
Among the hedge funds being tracked by Insider Monkey, Canada-based investment firm Fairfax Financial Holdings is a leading shareholder in BlackBerry Limited (NYSE:BB) with 46 million shares worth more than $454 million.
8. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 23
Upstart Holdings, Inc. (NASDAQ:UPST) owns and runs an artificial intelligence-based lending platform. In October, the company had revealed that it would be launching Auto Retail, a software system that would include cars from over 33 top brands and have AI financing.
In October, Upstart Holdings, Inc. (NASDAQ:UPST) had announced that it collaborated with Abound Credit Union, the largest credit union in Kentucky, to expand loan access in the state through all-digital lending.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in Upstart Holdings, Inc. (NASDAQ:UPST) with 12.4 million shares worth more than $3.9 billion.
In its Q2 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, Inc. (NASDAQ:UPST) was one of them. Here is what the fund said:
“During the quarter, we purchased Upstart Holdings Inc. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart.com. Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a large total addressable market, we believe that Upstart’s prospects are bright.”
7. HealthEquity, Inc. (NASDAQ:HQY)
Number of Hedge Fund Holders: 26
HealthEquity, Inc. (NASDAQ:HQY) provides tech-enabled health services. The company has a market cap of $3.5 billion and posted $733 million in revenue in the last fiscal year. There has been a lot of interest in the firm on Reddit during the earnings season.
On December 8, investment advisory Deutsche Bank maintained a Buy rating on HealthEquity, Inc. (NASDAQ:HQY) stock with a price target of $52. George Hill, an analyst at the advisory, issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Echo Street Capital Management is a leading shareholder in HealthEquity, Inc. (NASDAQ:HQY) with 1.9 million shares worth more than $126 million.
6. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 32
Chewy, Inc. (NYSE:CHWY) provides ecommerce services with a focus on pets. The company recently posted mixed earnings and lowered 2022 guidance. Wedbush analyst Seth Basham cut his price target on the stock to $55 from $70, citing supply chain concerns.
However, Raymond James analysts said that they expect long-term growth at the company fueled by an increased spending on digital channels for pet care.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Zevenbergen Capital Investments is a leading shareholder in Chewy, Inc. (NYSE:CHWY) with 1.1 million shares worth more than $77 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT), Chewy, Inc. (NYSECHWY) is one of the stocks on the radar of growth investors.
In its Q4 2020 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Chewy, Inc. (NYSE:CHWY) was one of them. Here is what the fund said:
“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.
Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.
In addition to one-time sales, Chewy is creating a recurring revenue model through its “autoship” program. This is essentially a subscription service for products that are sent at intervals specified by customers and includes such items as food and medicine. Customers are more profitable the longer they stay with the company, as their “lifetime value” grows. The company is organized around providing an exceptional customer experience. Chewy has 10 fulfillment centers scattered across the US, which enable cost-efficient overnight shipments to about 80% of the U.S. population and cost-efficient two-day shipments to nearly 100%. This allows Chewy to provide excellent service to the company’s more than 12.7 million active users.
Chewy’s ability operate profitably in the future hinges on two key variables: growing its customer base and more efficiently managing its fulfillment costs through automation of its fulfillment centers, thereby decreasing labor costs. Chewy has a smart, experienced management team and the company is expected to become profitable at the end of this fiscal year.”
5. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 51
Ford Motor Company (NYSE:F) is an automotive firm based in Michigan. Retail investors on Reddit have started taking note of the stock as the company emerges as a major player in the EV market and perhaps the biggest Tesla competitor in the United States.
Investment bank Morgan Stanley has forecast that Ford Motor Company (NYSE:F) is poised to reach over 1 million in EV unit sales by the end of this decade based on current growth numbers.
At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Ford Motor Company (NYSE:F), down from 55 in the preceding quarter worth $2.1 billion.
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
4. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 51
DocuSign, Inc. (NASDAQ:DOCU) operates as a cloud software firm. Cloud computing has been a major growth area of the tech sector and retail investors who frequent Reddit forums are starting to realize this, pouring into companies like DocuSign to make quick profits.
On December 3, investment advisory Oppenheimer maintained an Outperform rating on DocuSign, Inc. (NASDAQ:DOCU) stock with a price target of $250, noting that demand for the products of the firm was “normalizing” after a massive surge through 2020.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in DocuSign, Inc. (NASDAQ:DOCU) with 7.3 million shares worth more than $1.8 billion.
In its Q2 2021 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and DocuSign, Inc. (NASDAQ:DOCU) was one of them. Here is what the fund said:
“DocuSign provides electronic signature solutions. The firm reported an excellent quarter and investors have appreciated the strong growth combined with the excellent margins the company has posted. DocuSign has a long runway of growth ahead and we believe that it remains in a favorable position to continue gaining market share from traditional manual and paper-based signature solutions.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Tesla, Inc. (NASDAQ:TSLA) makes and sells electric vehicles and clean energy equipment. Tesla has been a Reddit favorite for months and the company still features prominently on the WallStreetBets forum.
Tesla, Inc. (NASDAQ:TSLA) was granted a new patent by US authorities recently. The patent covers the QOS manager, a system used for chip communications. Investment advisory UBS has touted the “software” potential of the firm in a recent investor note as well.
At the end of the third quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Tesla, Inc. (NASDAQ:TSLA), the same as in the previous quarter worth $9 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 65
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor firm based in California. A lot of discussion around chipmakers on the WallStreetBets forum centers on AMD since the firm has solid fundamentals and tremendous growth potential.
Advanced Micro Devices, Inc. (NASDAQ:AMD) posted earnings for the third quarter on October 26, reporting earnings per share of $0.73, beating predictions by $0.07. The revenue over the period was $4.3 billion, up 53% year-on-year.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Advanced Micro Devices, Inc. (NASDAQ:AMD) with 12 million shares worth more than $1.3 billion.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Advanced Micro Devices, Inc. (NASDAQ:AMD) was one of them. Here is what the fund said:
“We also exited our positions in Advanced Micro Devices. Our investment campaign in Advanced Micro Devices (AMD) began in the second half of 2018, and we have seen a new management team reinvigorate the company’s product portfolio of microprocessors for PCs and servers, graphics processors, and video game consoles. These new, higher-margin products have helped the company partially close its margin gap with peers and capture share from market leader Intel. While we believe there is meaningful runway for further share gains and margin expansion, AMD has appreciated far beyond our mid-cap market cap mandate, and we exited our position.”
1. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 66
Intel Corporation (NASDAQ:INTC) makes and sells essential tech for smart devices. Redditors have hailed the massive investments that Intel is making into chip manufacturing to compete with Chinese chip makers in the long run.
Northland analyst Gus Richard recently upgraded Intel Corporation (NASDAQ:INTC) stock to Market Perform from Underperform with a price target of $49, noting that Intel could become a Western alternative to Chinese chip makers under a new expansion plan.
At the end of the third quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $6.4 billion in Intel Corporation (NASDAQ:INTC), down from 78 in the previous quarter worth $6.7 billion.
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Disclosure. None. 10 New Stocks Reddit’s WallStreetBets is Buying is originally published on Insider Monkey.
