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10 Stocks Reddit is Piling Into Before Earnings

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·11 min read
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In this article, we discuss the 10 stocks Reddit is piling into before earnings. If you want to skip our detailed analysis of these stocks, go directly to 5 Stocks Reddit is Piling Into Before Earnings.

The stock market is on track to register a strong earnings quarter as more firms release their second quarter results. Retail investors on internet platforms like Reddit have been piling into equities that are expected to smash market estimates on earnings per share and revenue in anticipation of gains in the share price over the next few days. On August 3, the S&P 500 Index, the benchmark for the industry, climbed 36 points, beating a record set late last month, and pushed year-to-date gains to almost 20% as businesses continued to report record earnings.

Other economic indicators were also positive, with the Dow Jones Industrial Average jumping to 35,117, registering a year-to-date gain of about 16%. The NASDAQ touched 14,761 points, up 0.6% to register a year-to-date gain of around 16% as well. Corporate earnings released in the past few days have helped overshadow market concerns around inflation and the spread of the Delta variant of the coronavirus. Data from research firm Refinitiv suggests that the market is set for the biggest quarterly earnings growth in more than a decade.

Retail investors, who are on track to pour more than $400 billion into equities this year, want to take advantage of this growth. Some of the stocks presently trending on Reddit, the social media platform of choice for retail investors, include Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Uber Technologies, Inc. (NYSE: UBER), ViacomCBS Inc. (NASDAQ: VIAC), Cloudflare, Inc. (NYSE: NET), and Penn National Gaming, Inc. (NASDAQ: PENN), among others discussed in detail below.

The influx of retail investors on the market in recent months has changed overall market dynamics. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Image by Sergei Tokmakov www.thecorporateattorneys.com from Pixabay

With this context in mind, here is our list of the 10 stocks Reddit is piling into before earnings. These were ranked keeping in mind the number of mentions on Reddit, analyst ratings, business fundamentals, and hedge fund sentiment around each. The firms listed below are expected to unveil their earnings results for the second quarter on August 5 or August 6.

Stocks Reddit Is Piling Into Before Earnings

10. Himax Technologies, Inc. (NASDAQ: HIMX)

Number of Hedge Fund Holders: 18 Expected Earnings Date: August 5 (Before Market Open)

Himax Technologies, Inc. (NASDAQ: HIMX) is ranked tenth on our list of 10 stocks Reddit is piling into before earnings. The company operates from Taiwan and markets display image processing technologies. The firm will reveal earnings results for the second quarter before the opening of the market on August 5. In late May, the firm declared an annual dividend of $0.272 per share, an increase of 170% from the previous dividend of $0.10 per share. It has a market cap of over $2.4 billion.

In earnings results for the first quarter, posted on May 6, Himax Technologies, Inc. (NASDAQ: HIMX) reported earnings per share of $0.38, in line with market estimates. The revenue over the period was $309 million, up 67% year-on-year.

Out of the hedge funds being tracked by Insider Monkey, California-based investment firm Yiheng Capital is a leading shareholder in Himax Technologies, Inc. (NASDAQ: HIMX) with 8.1 million shares worth more than $111 million.

Just like Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Uber Technologies, Inc. (NYSE: UBER), ViacomCBS Inc. (NASDAQ: VIAC), Cloudflare, Inc. (NYSE: NET), and Penn National Gaming, Inc. (NASDAQ: PENN), Himax Technologies, Inc. (NASDAQ: HIMX) is one of the stocks Reddit is piling into for earnings.

9. Fisker Inc. (NYSE: FSR)

Number of Hedge Fund Holders: 22 Expected Earnings Date: August 5 (After Market Close)

Fisker Inc. (NYSE: FSR) is placed ninth on our list of 10 stocks Reddit is piling into before earnings. The company develops and sells electric vehicles and is based in California. The firm is different from other EV manufacturers as it mostly uses third parties for the manufacturing. It will announce earnings results for the second quarter after the closing of the market on August 5. In the first quarter, the company missed market estimates on earnings per share. It has a market cap of over $4.7 billion.

On June 8, investment advisory RBC Capital initiated coverage of Fisker Inc. (NYSE: FSR) stock with an Outperform rating and a price target of $27, highlighting that the company was on a different path to other EV firms in the manufacturing process.

At the end of the first quarter of 2021, 22 hedge funds in the database of Insider Monkey held stakes worth $337 million in Fisker Inc. (NYSE: FSR), up from 18 the preceding quarter worth $146 million.

In addition to Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Uber Technologies, Inc. (NYSE: UBER), ViacomCBS Inc. (NASDAQ: VIAC), Cloudflare, Inc. (NYSE: NET), and Penn National Gaming, Inc. (NASDAQ: PENN), Fisker Inc. (NYSE: FSR) is one of the stocks Reddit is piling into for earnings.

8. The Goodyear Tire & Rubber Company (NASDAQ: GT)

Number of Hedge Fund Holders: 23 Expected Earnings Date: August 6 (Before Market Open)

The Goodyear Tire & Rubber Company (NASDAQ: GT) is a firm that makes and sells tires. It is headquartered in Ohio. It is ranked eighth on our list of 10 stocks Reddit is piling into before earnings. The firm is expected to unveil earnings for the second quarter before the opening of the market on August 6. In earnings results for the first quarter, posted on April 30, the firm reported earnings per share of $0.43, beating market estimates by $0.30. The revenue over the period was $3.5 billion, up 14% year-on-year.

On May 4, investment advisory Deutsche Bank maintained a Hold rating on The Goodyear Tire & Rubber Company (NASDAQ: GT) stock but raised the price target to $21 from $19, noting that the firm was in the early stages of a large earnings recovery.

At the end of the first quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $429 million in The Goodyear Tire & Rubber Company (NASDAQ: GT), down from 27 the preceding quarter worth $216 million.

Alongside Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Uber Technologies, Inc. (NYSE: UBER), ViacomCBS Inc. (NASDAQ: VIAC), Cloudflare, Inc. (NYSE: NET), and Penn National Gaming, Inc. (NASDAQ: PENN), The Goodyear Tire & Rubber Company (NASDAQ: GT) is one of the stocks Reddit is piling into for earnings.

7. Beyond Meat, Inc. (NASDAQ: BYND)

Number of Hedge Fund Holders: 26 Expected Earnings Date: August 5 (After Market Close)

Beyond Meat, Inc. (NASDAQ: BYND) is a California-based food company that makes and sells plant-based meat products. It is placed seventh on our list of 10 stocks Reddit is piling into before earnings. On July 26, three days after the firm launched on the JD store, it announced that two plant-based meat alternatives of the firm had become permanent additions to the Pizza Hut delivery menu in the United Kingdom. The company missed market estimates on revenue and earnings per share in the first quarter.

On May 24, investment advisory Bernstein upgraded Beyond Meat, Inc. (NASDAQ: BYND) stock to Outperform from Underperform with a price target of $130, noting that food service channels were in the process of rebounding after a difficult 2020.

At the end of the first quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $338 million in Beyond Meat, Inc. (NASDAQ: BYND), down from 27 in the preceding quarter worth $211 million.

Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Uber Technologies, Inc. (NYSE: UBER), ViacomCBS Inc. (NASDAQ: VIAC), Cloudflare, Inc. (NYSE: NET), and Penn National Gaming, Inc. (NASDAQ: PENN) are some of the stocks Reddit is piling into for earnings, just like Beyond Meat, Inc. (NASDAQ: BYND).

In its Q2 2021 investor letter, Baillie Gifford, an asset management firm, highlighted a few stocks and Beyond Meat, Inc. (NASDAQ: BYND) was one of them. Here is what the fund said:

“One of the most important cognitive elements, is our recognition that consumer patterns and attitudes are evolving increasingly rapidly and with ever greater amplitude. While the human needs for self-actualisation, esteem and belonging are innate and immutable, they are being expressed in new ways. Tastes are being shaped by social groups who are culturally similar but geographically distant. The lines between the physical and digital-self continue to blur.

To those in the throes of middle age, this can be discombobulating. I profess to unease when my daughter recently earned five pounds stacking logs – only to ‘blow’ this pocket money on a pair of virtual Gucci sneakers for her online Roblox character. But we need to be imaginative about the possible size of the market for virtual luxury in the long term and it’s encouraging to observe that Kering is already on the front foot. It is also amply clear that the experienced Long Term Global Growth investors who predate Generations Y & Z, need the help of colleagues in understanding the mood and aspirations of a new cohort of conscious consumers. In this sense, the multigenerational and multicultural dynamic within the LTGG team (and indeed across the broader Baillie Gifford investment floor), has never seemed more important.

It was the younger members of the team who pushed us to be more imaginative on the true size of the opportunity for Beyond Meat. This holding’s investment case is predicated firmly on the removal of the cow as a rather inefficient middle-man between the sun and the stomach. Some within the team see no reason why the opportunity for Beyond Meat shouldn’t ultimately be larger than the $500bn market for traditional protein forms.”

6. Fiverr International Ltd. (NYSE: FVRR)

Number of Hedge Fund Holders: 27 Expected Earnings Date: August 5 (Before Market Open)

Fiverr International Ltd. (NYSE: FVRR) is ranked sixth on our list of 10 stocks Reddit is piling into before earnings. The firm provides online talent solutions and is based in Israel. It has a market cap of close to $9 billion and posted close to $200 million in revenue last year. The firm will reveal earnings for the second quarter before the opening of the market on August 5. In the first quarter, the company beat market expectations on revenue and earnings per share.

On May 25, investment advisory RBC Capital initiated coverage of Fiverr International Ltd. (NYSE: FVRR) stock with an Outperform rating and a price target of $235, identifying the firm as a disruptor in the field with fast growth.

At the end of the first quarter of 2021, 27 hedge funds in the database of Insider Monkey held stakes worth $398 million in Fiverr International Ltd. (NYSE: FVRR), down from 29 in the previous quarter worth $528 million.

Activision Blizzard, Inc. (NASDAQ: ATVI), Match Group, Inc. (NASDAQ: MTCH), Uber Technologies, Inc. (NYSE: UBER), ViacomCBS Inc. (NASDAQ: VIAC), Cloudflare, Inc. (NYSE: NET), and Penn National Gaming, Inc. (NASDAQ: PENN) are some of the stocks Reddit is piling into for earnings, in addition to Fiverr International Ltd. (NYSE: FVRR).

In its Q1 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Fiverr International Ltd. (NYSE: FVRR) was one of them. Here is what the fund said:

“We sold out of Fiverr International Ltd., the marketplace for freelance services, since the stock ran up multiple fold since our purchase less than a year ago and traded at a valuation that we thought captured much of the future opportunity.”

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Disclosure. None. 10 Stocks Reddit is Piling Into Before Earnings is originally published on Insider Monkey.