Since 2020, meme stocks have become a new classification of stocks for investors to consider. Meme stocks refer to stocks that have grown in popularity among retail traders, primarily due to heightened awareness on social media forums such as Reddit.com and, more specifically, the sub-Reddit, wallstreetbets.com.
Not surprisingly, GameStop Corp. (NYSE: GME) is the most well-known meme stock. As events in 2024 have shown, the company still has a loyal following. The short squeeze that occurred with GME stock in 2021 highlights the idea that the online communities that follow these stocks can move prices higher or lower very quickly.
However, although GameStop and stocks like AMC Entertainment Holdings Inc. (NYSE: AMC) get the lion's share of headlines, many other meme stocks are of the more conventional variety. In this special presentation, we're looking at seven stocks that are known as meme stocks but may be worth investor attention on a broader level.
Quick Links
- Advanced Micro Devices
- Tesla
- Moderna
- Alcoa
- Robinhood
- Rocket Lab
- DraftKings
#1 - Advanced Micro Devices (NASDAQ:AMD)
Advanced Micro Devices Inc. (NASDAQ: AMD) is a leading manufacturer of semiconductor chips. The company competes with market darling Nvidia Corp. (NASDAQ: NVDA). However, that may not be the most helpful way to think about getting involved with AMD stock.
Currently, Nvidia dominates the data center market with over 85% of the market share. That’s a huge first-mover advantage that will be tough to overcome. However, the opportunity for Advanced Micro Devices, at least in the short term, comes from the refresh cycle for central processing units (CPUs) and graphic processing units (GPUs). AMD has dominated these areas in the past and is likely to continue to show strength as the cycle refreshes.
Growth in the company’s total addressable market (TAM) is one reason analysts are forecasting 66% earnings growth for AMD in the next 12 months. That could also be why Cathie Wood is taking a keen interest in AMD stock. Not all the news is good, however. Morgan Stanley (NYSE: MS) recently downgraded AMD from Overweight to Equal Weight. It did, however, maintain its $176 price target.
About Advanced Micro Devices
Advanced Micro Devices, Inc operates as a semiconductor company worldwide. It operates through Data Center, Client, Gaming, and Embedded segments. The company offers x86 microprocessors and graphics processing units (GPUs) as an accelerated processing unit, chipsets, data center, and professional GPUs; and embedded processors, and semi-custom system-on-chip (SoC) products, microprocessor and SoC development services and technology, data processing unites, field programmable gate arrays (FPGA), and adaptive SoC products.
Read More - Current Price
- $152.44
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 29 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $193.45 (26.9% Upside)
#2 - Tesla (NASDAQ:TSLA)
Tesla Inc. (NASDAQ: TSLA) has been a favorite of retail investors since the company first went public. Those early adopters have seen TSLA stock go through many boom-and-bust cycles. In 2024, the company is going through a bust time, with shares down nearly 28%.
Tesla founder and CEO Elon Musk is always in the news for various reasons, which can be positive or negative for TSLA stock. However, as of June 2024, the central issue facing the company is its EV business. Tesla is the unquestioned leader among U.S. electric vehicle manufacturers and is under scrutiny as mass adoption of EVs remains on hold for many reasons.
Analysts continue to be bearish on TSLA stock, which has been one of the most downgraded stocks in the last several months. Before getting involved, investors should ask if this dip is just a matter of price discovery or if it indicates a larger problem with the company. Based on a consensus price target that is still at $185.90, this looks like a time to wait for the price to go down and buy the dip.
About Tesla
Tesla, Inc designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, body shop and parts, supercharging, retail merchandise, and vehicle insurance services.
Read More - Current Price
- $227.74
- Consensus Rating
- Hold
- Ratings Breakdown
- 13 Buy Ratings, 17 Hold Ratings, 8 Sell Ratings.
- Consensus Price Target
- $209.60 (8.0% Downside)
#3 - Moderna (NASDAQ:MRNA)
Moderna Inc. (NASDAQ: MRNA) was one of the companies that successfully brought a vaccine for COVID-19 to market in 2021. It’s impossible to understate what this meant to the company’s fortunes. Moderna went from being a clinical-stage biopharmaceutical company with revenue in the millions to generating over $7 billion in one quarter in 2022. Not surprisingly, that correlated with the mRNA stock price soaring to a record high of over $450 in 2022.
As revenue has normalized and earnings have turned negative, MRNA stock is back down to 2020 levels. However, the company recently received FDA approval for an RSV vaccine. It also has a combination Covid/influenza vaccine in late-stage trials. And the company is partnering with Merck & Co. Inc. (NYSE: MRK) on a potential cancer vaccine. All of those vaccines are further proof of the company’s mRNA technology, which will be critical in an upcoming area of customizable medicine.
Moderna stock is up 47% in 2024, and the analyst forecasts on MarketBeat have a consensus Hold rating on MRNA. However, the 5% pullback in early June could be the dip some investors have been waiting for.
About Moderna
Moderna, Inc, a biotechnology company, discovers, develops, and commercializes messenger RNA therapeutics and vaccines for the treatment of infectious diseases, immuno-oncology, rare diseases, autoimmune, and cardiovascular diseases in the United States, Europe, and internationally. Its respiratory vaccines include COVID-19, influenza, and respiratory syncytial virus, spikevax, and hMPV/PIV3 vaccines; latent vaccines comprise cytomegalovirus, epstein-barr virus, herpes simplex virus, varicella zoster virus, and human immunodeficiency virus vaccines; public health vaccines consists of Zika, Nipah, Mpox vaccines; and infectious diseases vaccines, such as lyme and norovirus vaccines.
Read More - Current Price
- $69.48
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 13 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $103.93 (49.6% Upside)
#4 - Alcoa (NYSE:AA)
Alcoa Corp. (NYSE: AA) stock is up 22% in 2024 and 65% in the three months ending June 10, 2024. That’s not the kind of performance you normally expect from a materials stock. The reason for the growth is the strength of the aluminum market, which is key to the infrastructure boom supported by billions in federal government spending.
The Alcoa analyst forecasts on MarketBeat give AA stock a $35.04 price target, which is a 15% downside from its price on June 10, 2024. As MarketBeat analyst Gabriel Osorio-Mazilli pointed out, analysts are weighing the company’s reliance on the aerospace industry, specifically Boeing Corp. (NYSE: BA).
However, analysts are still signaling an upside for BA stock, which will likely have a halo effect for a company like Alcoa. That seems to be the opinion of Citigroup Inc. (NYSE: C) which boosted its price target from $32 to $50 on May 21, 2024.
About Alcoa
Alcoa Corporation, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Iceland, Norway, Brazil, Canada, and internationally. The company operates through two segments, Alumina and Aluminum. It engages in bauxite mining operations; and processes bauxite into alumina and sells it to customers who process it into industrial chemical products, as well as aluminum smelting and casting businesses.
Read More - Current Price
- $34.55
- Consensus Rating
- Hold
- Ratings Breakdown
- 5 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $39.09 (13.1% Upside)
#5 - Robinhood (NASDAQ:HOOD)
It's only logical that Robinhood Markets Inc. (NASDAQ: HOOD) would make a list of viable meme stocks. The company has embraced retail investors in its effort to democratize the world of investing. That has paid off, with the company showing strong user growth in 2023, which is expected to continue into 2024. That growth has been aided by the company's premium service, Robinhood Gold, which has attractive features, such as offering investors 5% interest on their uninvested cash, 0% interest on the first $1,000 margin that users borrow, and a 3% IRA match on eligible contributions.
That said, it's impossible to discuss Robinhood's popularity without mentioning cryptocurrency. This puts the company under regulatory scrutiny, and analysts are wary of its ability to continue its current growth trajectory.
However, the opposite side of that argument is that demand for crypto will increase if the Federal Reserve cuts interest rates and the dollar's value decreases. Plus, in an increasingly bifurcated economy, there will always be a place for a company trying to help the "little guy" build wealth.
About Robinhood Markets
Robinhood Markets, Inc operates financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds (ETFs), American depository receipts, options, gold, and cryptocurrencies. The company offers fractional trading, recurring investments, fully-paid securities lending, access to investing on margin, cash sweep, instant withdrawals, retirement program, around-the-clock trading, and initial public offerings participation services.
Read More - Current Price
- $22.34
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $22.83 (2.2% Upside)
#6 - Rocket Lab (NASDAQ:RKLB)
Next up is Rocket Lab USA Inc. (NASDAQ: RKLB), an investment in the emerging space economy. The company has two business units: Launch Services and Space Services. While the launch part of the business is more glamorous, the space services division is delivering the most revenue now and in the foreseeable future. That's a key reason why Rocket Lab is not yet profitable.
That will have to change for RKLB stock to live up to its tantalizing potential. The opportunity will come from the company's Neutron rocket, which can deliver a larger payload and increase revenue per launch.
That certainly seems to be attracting analysts. The Rocket Lab analyst forecasts on MarketBeat have a Moderate Buy rating on the stock with a price target of $7.39, which is more than 60% higher. That's tantalizing, but investors should be careful to scale into their position accordingly.
About Rocket Lab USA
Rocket Lab USA, Inc, a space company, provides launch services and space systems solutions for the space and defense industries. The company provides launch services, spacecraft design services, spacecraft components, spacecraft manufacturing, and other spacecraft and on-orbit management solutions; and constellation management services, as well as designs and manufactures small and medium-class rockets.
Read More - Current Price
- $7.38
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $6.86 (7.0% Downside)
#7 - DraftKings (NASDAQ:DKNG)
DraftKings Inc. (NASDAQ: DKNG) is the leader in the emerging sports betting market. Significantly, it’s the leader in the online sports betting market, where the vast majority of betting takes place. That is showing up in the number of unique customers joining the DraftKings platform.
The bullish thesis for DKNG stock lies in the idea that several large states have yet to legalize online sports betting. However, the allure of potential revenue will likely prove too hard to pass up. On the other hand, online sports betting also gives states something else to tax. That’s creating a problem for the company in Illinois and is likely to become an issue in other states.
This is an issue to watch before you put money into a company that is currently not profitable. On the other hand, many states will have to tread carefully not to bite on the hands that feed them.
About DraftKings
DraftKings Inc operates as a digital sports entertainment and gaming company in the United States and internationally. It provides online sports betting and casino, daily fantasy sports, media, and other consumer products, as well as retails sportsbooks. The company also engages in the design and development of sports betting and casino gaming software for online and retail sportsbooks, and iGaming operators.
Read More - Current Price
- $38.22
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $49.78 (30.2% Upside)
Should you invest in meme stocks? The answer is the same for the question, should you invest in technology stocks, consumer staples stocks, or any other stock sector? That is, it depends. And with meme stocks, it can depend on why the stocks are catching traders' attention.
In many cases, meme stocks are penny stocks. These stocks attract retail traders because a small capital investment can yield a significant profit. On the other hand, penny stocks carry some of the highest short interest that can cause the price to move wildly in either direction.
Like other sector stocks, some recent exchange-traded funds (ETF) that are dedicated to meme stocks have popped up. One of these is the Roundhill MEME ETF (NYSEARCA: MEME). And MarketBeat provides a free tool that allows you to compare popular meme stocks on a variety of factors, including analyst ratings, price performance, and price & volume.
More Investing Slideshows:
