4 Reddit Stocks to Avoid Like the Plague

imageStock Markets49 minutes ago (Apr 26, 2021 05:01PM ET)

(C) Reuters. 4 Reddit Stocks to Avoid Like the Plague

Following the GameStop (NYSE:GME) short-squeeze last year, the Reddit forum r/WallStreetBets (WSB) has grown immensely popular. Investors on Reddit’s chat room focus mainly on speculative penny stocks that possess high short interest because of their poor financials and bleak growth potential. While WSB’s huge bets against short sellers and consequent short squeezes can help these stocks skyrocket in price, they are tremendously risky investment bets. So, we think Reddit stocks Sundial Growers (NASDAQ:SNDL), Ocugen (NASDAQ:OCGN), Castor Maritime (CTRM), and Naked Brand Group (NAKD), which have bleak growth outlooks, are best avoided now. Let’s discuss these names in more detail.The GameStop (GME) frenzy took Wall Street by storm earlier this year in one of the biggest, unprecedented short squeezes in history. The young or novice investors on Reddit’s r/WallStreetBets (WSB) chatroom reported substantial gains from this stock because its price soared 3,116.6% over the past year. However, the company lacked fundamental strength–its revenues and earnings were declining over the prior three years, along with a bleak outlook. Investors were primarily targeting highly speculative companies, such as GME, to corner hedge funds to increase their short-term returns.

The investment environment has changed significantly over the past couple of months, however. Investors are now betting on value stocks with solid fundamentals and significant growth potential because the economy is recovering at a faster-than-expected pace. Owing to this change in sentiment, the Reddit community has failed to trigger another GameStop-like short squeeze. Investors are now betting on the U.S.’ economic recovery and a rebound in global markets rather than speculating for short-term gains.

While several Reddit communities, such as WSB and ‘pennystocks’, are trying to precipitate another short squeeze, the majority of stocks targeted by these groups are highly speculative, with bleak growth projections and poor financials. Thus, we believe Reddit stocks Sundial Growers Inc . (SNDL), Ocugen, Inc. (OCGN), Castor Maritime Inc. (CTRM), and Naked Brand Group Limited (NAKD) are best avoided now.

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4 Reddit Stocks to Avoid Like the Plague

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