Reddit stocks: what meme stocks are trending?

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Josh Warner
By :  ,  Market Analyst

Top Reddit stocks to watch

Below is a list of the top 10 most mentioned US stocks on the WallStreetBets thread on Reddit over the last 24 hours on February 7, 2023, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) and other instruments have been excluded. 

  1. Tesla
  2. C3.ai
  3. Bed Bath & Beyond
  4. Pinterest
  5. NVIDIA
  6. AMC Entertainment
  7. Snap
  8. Meta
  9. Microsoft
  10. GameStop

 

US futures are muted this morning as markets turn their attention to Fed chair Jerome Powell and continue to digest earnings. The Dow Jones Industrial Average is down 0.1% while the S&P 500 is flat. The tech-heavy Nasdaq 100 is up 0.1%.

The spotlight is on Powell, who will give a speech at the Economic Club of Washington later today. Markets are on the lookout for any fresh hawkish commentary following last week’s surprising news headlined by strong US jobs data and unemployment hitting its lowest level in over 53 years. This has thrown some cold water on hopes that the Fed will raise rates a couple more times before pressing pause and reopened the door to more rate hikes in 2023. Powell said that the disinflationary process has started last week, so markets are looking out for some clarification on what to expect this year.

Meanwhile, artificial intelligence is hitting the headlines once again today as Big Tech attempts to show it still at the forefront of technological breakthroughs. Alphabet is up 0.7% this morning after announcing it will soon launch its own chatbot service named Bard and allow AI to drive its core search engine as it looks to address fears that new services like the hugely successful ChatGPT could leapfrog its existing services. Bard is being introduced to select users before being publicly released in the coming weeks, when it will face its first test as markets weigh up how it stacks up against ChatGPT. ‘Bard seeks to combine the breadth of the world’s knowledge with the power, intelligence and creativity of our AI,’ said CEO Sundar Pichai. Bard is underpinned by Google’s AI named LaMDA, which the company says requires less computing power that should allow it to serve more users. ChatGPT has been inundated with requests since launch and has had to turn away demand.

Microsoft is up 0.7%. The company is already a shareholder of OpenAI, the company behind ChatGPT, and has recently committed to investing billions more into the company and introduce its suite of services to its clients. There has also been speculation that Microsoft will use ChatGPT to thrust its search engine Bing into the modern era. Microsoft and OpenAI are working together but are independently looking for ways that can be monetised. Microsoft is expected to unveil its own AI products later today, based on invitations sent to media outlets. It is expected to start embedding AI into a variety of its own products, and OpenAI CEO Sam Altman will join Microsoft CEO Satya Nadella at the event.

Meanwhile, there have been reports that Microsoft’s proposed $69 billion acquisition of video game giant Activision Blizzard could be blocked by UK regulators, with the deal also facing scrutiny in the US and Europe. The UK Competition & Markets Authority could publish its provisional findings over the merger this week. Activision Blizzard is up 2.3% today at $73.20 after its latest Call of Duty game helped it beat expectations in the latest quarter. Adjusted sales came in at $3.57 billion to come in ahead of the $3.16 billion forecast and earnings were also better than expected even if they fell from last year. It said sales should grow by a high single-digit percentage over the full year. Brokers welcomed the results, although they remain concerned about the uncertainty over the Microsoft deal with Activision Blizzard shares still trading well below the $95 per share offer price.

Chinese search engine giant Baidu is up 14.8% and at nine-month highs after announcing it too plans to launch its own rival to ChatGPT in March named Wenxin Yiyan, or ERNIE BOT in English. This is further evidence that there is now a race to dominate the space.

NVIDIA is up 1.5%. Numerous brokers have highlighted in recent weeks that NVIDIA could be one of the biggest beneficiaries of any offtake in AI as its chips are used to provide the necessary computing power. The chipmaker is scheduled to release quarterly results later this month.

C3.ai is another stock reaping rewards from the surge in interest in AI, with the stock up 2.7% this morning and at its highest level in over a year. The company recently added further fuel to the rally by unveiling a suite of generative AI products that can ‘rapidly locate, retrieve, and present all relevant data across the entire corpus of an enterprise’s information systems.’ The company said the new suite ‘integrates the latest AI capabilities from organizations such as Open AI, Google, and academia, and the most advanced models, such as ChatGPT and GPT-3 into C3 AI’s enterprise AI products.’

Tesla is up 0.6% at $196.06 to trade at its highest level in over two months, with the electric carmaker on course to gain ground for a seventh consecutive session today. The company rose yesterday after the US government included the Model Y in its tax credits on offer for electric SUVs, which should be positive for demand and allowed Tesla to nudge up prices. Markets are warming to the prospect that Tesla has advantages over its rivals as a price war begins to erupt. The stock is also benefiting from CEO Elon Musk being cleared last week of misleading investors over securing funding for a takeover back in 2018. A number of brokers raised their price target on Tesla, including RBC to $223 from $186, Guggenheim to $105 from $89 and Wedbush to $225 from $200.

Pinterest is down 3% today at $27 after sales grew slower than anticipated in the latest quarter thanks to the softness in the digital advertising market, prompting it to take action to cut costs this year. The social media platform said revenue was up 4% to $877 million, falling short of the $886 million forecast. Adjusted earnings of $0.29 were slightly better than the $0.27 forecast. Monthly active users continued to grow, but at a slower pace than anticipated. Pinterest warned revenue would grow by a low single-digit percentage in the first quarter, which was also disappointing compared to the 7% target set by Wall Street. Chief financial officer Todd Morgenfeld, who will leave at the start pf July, said things will remain challenging in the near term and that it plans to cut costs in response. A number of brokers changed their target price after the results, including Piper Sandler to $32 from $30, JPMorgan to $27 from $28, Credit Suisse to $26 from $25, and Bernstein to $27 from $25.

Snap, the owner of social media platform Snapchat, is up 0.8%. The company reported its own results a week ago and also missed expectations when it came to sales thanks to challenging advertising market, warning that revenue would experience a potentially sharper fall in the current quarter.

Larger social media group Meta, which owns the likes of Facebook and Instagram, is trading marginally higher before the bell as it continues to test new highs. It too is suffering from the slowdown in the advertising market but has won applause since its results last week showed it has slashed spending to protect profitability and launched a new $40 billion share buyback. It too is trying to find new catalysts by investing in the metaverse. Meta is celebrating a victory after a US court ruled it can by virtual reality content making startup Within. The Wall Street Journal has also reported that Meta plans to revamp its metaverse app and introduce a teen-friendly version in March.

Boeing is up 1% after announcing it plans to cut 2,000 jobs in areas such as finance and human resources through attrition and layoffs. That comes after the plane maker said it would hire 10,000 workers this year following the 15,000 additions made in 2022, suggesting it is reallocating resources.

CVS Health is down 0.7% and at its lowest level since October 2021 on reports from the Wall Street Journal that the company is close to agreeing a $10.5 billion deal to buy primary care centre operator Oak Street Health, which is up over 35% at $25.25 today. The deal would be worth around $39 per share and could be announced this week, the report said.

Centene is down 1.4% and set to open at its lowest level in over a year after the health insurer beat expectations in the fourth quarter. Adjusted EPS of $0.86 came in just ahead of the $0.85 forecast as demand for its Medicare health insurance plans rose and medical costs declined.

Royal Caribbean is up 0.7% and poised to open at its highest level since last May ahead of quarterly results due out later today. The cruise line operator has rallied in early 2023 as investors hope it can keep up the momentum after producing its first adjusted profit since the start of the pandemic in the last quarter. However, it has already warned it will report a loss of $1.30 to $1.50 per share this quarter, with analysts hoping it will come toward the lower end at $1.32. Analysts believe the cruise line operator will report revenue of $2.6 billion. The company has said it could deliver record adjusted Ebitda in 2023 thanks to strong early booking trends for 2023, so the key is demonstrating that this will remain the case in the face of macroeconomic headwinds and a possible recession on the horizon.

Jacob’s Solutions is trading flat ahead of quarterly results out this morning. The company is expected to report a 4.9% year-on-year rise in revenue to $3.5 billion and a 3.2% increase in adjusted EPS to $1.61. Jacob’s is trying to grow adjusted EPS by around 6% over the full financial year. Things in the US look favourable as the Infrastructure Investment and Jobs Act should provide more work, although the strong dollar and an underperformance overseas remain headwinds.

Disney shares are up 0.1% after announcing it will hold its annual general meeting on April 3, when shareholders will get to vote on whether activist investor Nelson Peltz should join the board of the House of Mouse. Disney’s board, led by new CEO Bob Iger who recently returned for a second stint, has told investors to vote against his election to the board. Iger will outline his new vision for Disney when it reports results tomorrow, which are expected to show that its theme parks and resorts continue to bounce back from the pandemic and that streaming losses have peaked. You can find out more on what to expect in our Disney Q1 Earnings Preview.

Bed Bath & Beyond is down over 27% before the bell after providing hope that it can avoid bankruptcy by selling equity. The troubled homeware retailer said yesterday that it plans to offer convertible preferred shares and warrants that could raise just over $1 billion to provide the funding it needs to find some breathing space as it tries to turn things around. That would see it raise $225 million immediately and up to another $800 million in the future through warrants. It warned that it would ‘likely file for bankruptcy protection’ if it fails to complete the transaction, suggesting this is the last opportunity for the company. Bloomberg reported that it has secured interest from enough institutional investors to get it over the line – with one anchor investor set to contribute a hefty chunk of the money. While it could be the key to survival, investors will be worried about potential dilution.

Other meme stock favourites AMC Entertainment and GameStop are also causing a stir after surging higher yesterday, enough to see trading temporarily halted in both stocks. AMC, which has seen trading volumes rise for five consecutive sessions, is up 1.5% and on course to open at its highest level in two months. GameStop is down 2.1% after closing at a two-month high yesterday.

 

How to trade meme stocks

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