Reddit stocks: what meme stocks are trending?

Close-up of stock market board
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 August 11, 2022, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) have been excluded. 

  1. Bed Bath & Beyond
  2. Invitae Corp
  3. Tesla
  4. Disney
  5. GameStop
  6. AMC Entertainment
  7. Coinbase
  8. Apple
  9. Roblox
  10. Advanced Micro Devices


Disney shares are up 8.8% this morning at $122.30 and trading at four-month highs after revealing it now has more streaming subscribers across its Disney+, EPSN+ and Hulu services than Netflix. It said it had 221.1 million subscribers across the three services, surpassing the 220.7 million that Netflix reported at the end of June. Disney is now gaining market share and delivering impressive growth at a time when Netflix is struggling after it started to lose subscribers for the first time in over a decade in 2022, sparking fears that it has already reached its peak. Netflix shares are down 0.1% today. Still, Disney’s streaming unit remains a drag on the bottom-line and Disney+ isn’t expected to become profitable until 2024, but the company has plenty of levers to pull to fund its ambitions as its theme parks, resorts and cruises start delivering significant profits as they recover from the pandemic. That came as Disney reported third quarter results that saw sales come in ahead of expectations for the third consecutive quarter. You can read more in Disney vs Netflix: Who is Winning the Streaming War?

Tesla shares are trading marginally higher this morning as markets continue to digest news that CEO Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker last week. He said this was to raise money in case he is ordered to buy Twitter as he prepares for a legal showdown this October. He tweeted that he thought it was ‘hopefully unlikely’ that he will be forced to buy the platform but said he decided to sell now to prevent any fire-sale in the future and to provide a backup should any equity partners back out. Bloomberg calculations show Musk has now sold around $32 billion worth of Tesla shares in the last 10 months alone, but he remains the largest shareholder with a 14.6% stake.

That comes as Reuters reported that Musk’s legal team is demanding that Twitter names the employees responsible for calculating how many bot and spam accounts are on the platform – which has become the single biggest issue in the battle between Musk and Twitter. The report said Musk’s legal team has asked the judge to order Twitter to name the staff members so they can be questioned. Twitter shares found higher ground after Musk conceded that he could lose the court case and be forced to buy the social media platform, but are down 0.6% this morning at $44.18 and remain below the $54.20 price tag under the takeover deal.

Apple shares are trading slightly higher in premarket trade but remain higher since its main assembly supplier Foxconn said this week that it expects the semiconductor shortage to ease in the second half, supporting the view that supply chain problems will improve. However, it also said revenue from its consumer electronics business will be broadly flat in the third quarter, signalling that demand for mid-to-high end smartphones is waning. Apple’s results last month were strong thanks to demand for iPhones, although sales of its array of other devices such as Mac computers, iPads and wearables all suffered declines from last year.

AMD shares are up 0.3% before the bell amid a volatile week as confidence in chipmakers cracks following a string of warnings. NVIDIA said sales would fall far short of its original target because of a slowdown in the gaming market, following disappointing sales figures out from the likes of Electronic Arts, Take-Two Interactive and Activision Blizzard in recent weeks. Meanwhile, memory chip manufacturer Micron said its results could fall short in the fourth quarter of its financial year due to the tough macroeconomic conditions and supply chain problems as customers have been adjusting their inventory levels, leading to slower growth.

Roblox shares took a knock after its latest results also showed weakness in the gaming market as bookings and earnings missed expectations and it lost far more users than anticipated in the second quarter, but have started to recover those losses as brokers become more bullish after its performance improved in July. The stock is trading slightly lower this morning at $47.97. Needham raised its price target to $55 from $45, JPMorgan to $53 from $45, Jefferies to $34 from $28, BofA Global Research to $54 from $45, and Wedbush to $34 from $28.

Coinbase shares continue to find higher ground and are up 2.9% at $96.87 despite suffering in the latest quarter amid subdued cryptocurrency markets as brokers remain upbeat about its prospects even if the outlook remains challenging in the near-term. DA Davidson raised its target price to $100 from $90 and said that the update ‘increases our confidence in an eventual recovery once the Fed truly pivots’, even if the near-term outlook remains ‘murky’. JMP Securities lowered its expectations over the short term but said the ‘current environment is not normal’. JPMorgan raised its price target to $64 from $61 and BTIG to $220 from $290. Piper Sandler cut its view to $115 from $120, while KBW downgraded Coinbase to Underperform and gave it a target price of $45 after warning ‘revenue visibility remains very challenging’.

Biotech firm Invitae Corp is a new entry overnight after exploding over 278% yesterday and hitting its highest level in over five months. The stock is losing steam in premarket trade this morning and is down over 19% at $6.98. The rally was prompted by news its adjusted loss in the latest quarter of $0.68 came in much narrower than the $0.76 loss pencilled-in by analysts. That has helped it recover some of the heavy losses booked this year, having outlined plans for a corporate restructuring less than one month ago. It said it has enough cash to see it through to the end of 2024 and reported a 17.5% rise in revenue in the second quarter.

Bed Bath & Beyond shares remain volatile. The stock rallied higher this month on reports the cash-strapped homeware retailer could secure fresh funding from private credit markets, reviving hopes it could bolster its balance sheet and encouraging retail investors to target short sellers. The stock has lost ground this week and is down 0.6% today at $10.45.

AMC Entertainment shares continue to push higher and are up 1.8% today and testing fresh four-month highs. The cinema chain operator recently unveiled plans to pay a special dividend in the form of preferred shares that will have their own listing on the NYSE under the ticker ‘APE’. Investors were initially nervous this could lead to dilution in the future, but have warmed to the idea after CEO Adam Aron allayed these concerns. You can find out more by reading APE Dividend: is it an AMC Stock Split?

GameStop has also been caught up in the renewed interest in meme stocks in recent weeks and is up 0.7% before markets open today, although it has lost ground since hitting four-month highs at the start of this week.


Other movers to watch

Rivian shares are up 1.6% today, with the electric carmaker set to report results after the closing bell today. All eyes are on whether it will maintain its goal of producing 25,000 cars this year after fellow startup Lucid more than halved its guidance due to supply chain problems. Rivian needs to produce almost 18,000 cars in the second half – or 9,000 per quarter - to achieve its target, which may prove a tall order in the current climate. You can read more in our Rivian Q2 Earnings Preview.

Bumble shares are down 8.9% this morning and at its lowest level in almost one month after lowering its revenue forecast for 2022 amid the war in Ukraine and more intense competition. The core Bumble dating app continues to grow but its other app, Badoo, is not performing as well as it targets lower-income users that are feeling the pinch. The exit from Russia and Belarus will knock around $20 million off annual revenue this year. Its revenue beat expectations in the latest quarter, but its loss was wider than anticipated. It said revenue this year will now be between $920 million to $930 million, down from its previous goal of $934 million to $944 million.


How to trade Reddit stocks

You can trade many of the hot stocks being discussed on Reddit with City Index.

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The Reddit frenzy

Retail investors realised their potential power in early January 2021 when a loosely coordinated strategy was formed on Reddit’s WallStreetBets chatroom to buy shares and out-of-money call options on stocks that were being targeted by short-sellers to push the price higher. The idea was to create a short-squeeze.


What is a short-squeeze?

A short-squeeze does what it says on the tin – it tries to squeeze short-sellers out of their positions. Short-sellers, mostly big institutional investors and hedge funds, bet that the price of a stock will fall but, as retail investors pile in and push the share price higher, they are forced to start buying the stock to try to limit their losses. The buying by the big players only fuels the share price higher.

You can read more about short-squeezes and how they can be predicted here.


David vs Goliath

The fact many of the stocks being targeted are fundamentally flawed or failing adds increased risk into an already volatile picture. GameStop is an out-of-favour retailer that sells physical video games during a time when games are mostly being bought online, while others like Blackberry are also laggards from the past.

With this in mind, it is unsurprising they were in the crosshairs of short-sellers that look for failing companies to bet against.  

But why are retail investors banding together to buy shares in flawed companies? This disconnect is partly explained by a growing resentment among the smaller players in the market, which disagree with the idea of large institutions profiting from a company’s failure through short-selling practices, creating what has been described as a ‘David vs Goliath’ battle.

It is important to note that not all the most actively-discussed stocks on Reddit are struggling or being targeted by short-sellers. Many of the most mentioned stocks, like Apple, are simply popular among the community.


Reddit stocks and volatility

The stark movements in stocks like GameStop has demonstrated the power and influence that social media-driven investors and traders can have on the market, having injected severe volatility into several stocks. Volatility presents opportunities for traders, and it doesn’t get more volatile than Reddit stocks right now.

For example, we saw GameStop - the first heavily-shorted stock to be targeted by social media-driven investors - go from below $19 at the start of 2021 to a new record high of over $347 by January 27, and the share price has remained highly volatile ever since.


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