Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
Reminiscing about the late 2020 period, the market is seeing a resurgence of meme stock trading. And once again, GameStop (NYSE: GME) is the leader, with an astronomical 377% resurgence over one month. In January 2021, GME shares went up from $4.3 to $86.88 per share.
This time around, since May 1st, GME stock has gone up from $10.91 to briefly $64.69 per share, rapidly falling under the $50 range and then up again at press time. This is ahead of the gaming retailer’s Q1 2024 earnings scheduled for June 5th.
Across analyst forecasts and platforms, GameStop is largely rated as “sell,” given that the company’s brick-and-mortar fundamentals remain dubious. This has also been the case for the wider meme stock phenomenon, demonstrated by the shutdown of Roundhill Meme Stock ETF (MEME) by the end of 2023.
While Nasdaq’s GME price target is $5.6, what about other meme stocks that have ridden the GameStop wave?
Rivian Automotive, Inc. (NASDAQ: RIVN)
At a time when Tesla (NASDAQ: TSLA) is cutting jobs amid cratering demand for luxury EVs, it is not optimal to be a lesser EV company but for premium electric SUVs. In line with expectations, Rivian delivered 13,588 EVs in Q1 2024, reaffirming April’s production figures to match the 57,000 total vehicles guidance for the full year.
On May 7th, the company delivered Q1 2024 earnings, boasting a 5.1% EV market share in the US. At a price tag of over $70k, the R1S model proved to be the best-seller for the quarter. Nonetheless, Rivian remains unprofitable, having reported a net loss of $1.446 billion vs $1.349 billion in the year-ago quarter.
Rivian’s free cash flow also remains depleted. Although improving, it is still negative, from negative $1.8 billion last year to negative $1.5 billion this quarter. Compared to Tesla, Rivian’s debt-to-equity ratio is now 0.549 vs 0.076 respectively.
However, as Rivian keeps to its production schedule ahead of the launch of more affordable R2 and R3 vehicles for mainstream consumers, there is more upside for RIVN stock. Pulled by Nasdaq, the analyst consensus placed the average RIVN price target at $14.57 vs current $11.75 per share.
Rivian’s 52-week low price is $8.26 per share. Over the last month, RIVN stock has increased 26%, outperforming TSLA by 2.5%.
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Reddit, Inc. (NASDAQ: RDDT)
Also on May 7th, Reddit delivered its Q1 2024 earnings. The progenitor of the meme stock trading, the social media platform reached a milestone. Up until this quarter, the company failed to deliver a profitable one.
But on an adjusted EBITDA basis, this was Reddit’s first profitable quarter, notwithstanding the net loss from the IPO launch expenses. Year-over-year, Reddit saw a 48% uptick in revenue to a net loss of $575.1 million, with the adjusted EBITDA of positive $10 million compared to negative $50.2 million in a year-ago quarter.
From the present revenue level of $243 million, the company’s guidance is set to the $240 – $255 million range, and adjusted EBITDA between $0 and $15 million from the $10 million milestone. RDDT shares are now among the most performant of the meme stocks, having gained 50% value over a one-month period.
However, the initial hype is likely to subside towards correction. WSJ’s average RDDT price target is $59.60 vs the currently elevated $64 per share. Reddit’s 52-week low price is $37.35, below the WSJ’s low forecast of $45 per share.
Nio, Inc. (NASDAQ: NIO ADR)
At $5.71 per share, NIO is a borderline penny stock, gaining a 43% boost over the month. The Chinese EV company has proven it can scale its operations for the smart electric vehicle market and battery as a service (BaaS). Like Rivian, Nio is primarily focused on premium SUVs and sedans.
The company increased deliveries by 30.7% from 2022 to 2023, having delivered a total of 160,038 EVs in 2023.
While Nio did suffer a $756 million net loss in Q4 2023, this was a 7.2% improvement from the year-ago quarter. Likewise, the company increased its cost-efficiency, showcased by the 11.9% vehicle margin compared to 6.8% in the year-ago quarter. In late December, CYVN’s strategic $2.2 billion equity investment will ensure Nio’s next exciting rollout.
In the second half of 2024, Nio is poised to enter the mainstream market with a more affordable model dubbed “Alps,” set within the $27k to $41.5k price range. Subsequently named Onvo, it is scheduled to launch on May 15th as the L60 model.
This could pose a major blow to Tesla’s shrinking presence in the Chinese market, even after multiple aggressive price cuts. Nasdaq consensus on the average NIO price target is $6.59 vs. the current $5.71 per share. Nio’s 52-week low price is $3.61, for context.
Which one do you perceive as riskier: meme stock, memecoin, or altcoin trading? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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