Photo by Wance Paleri on Unsplash
 

Reddit has become a hub for social-media-driven traders and investors that have proven their ability to move the markets, injecting huge volatility into stocks like GameStop and AMC. But what stocks are grabbing attention on Reddit today?
 

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 November 8, 2022, according to data from Quiver Quantitative. Exchange-Traded Funds (ETFs) have been excluded. 

1. Tesla (TSLA)
2. Digital World Acquisition Corp (DWAC)
3. Apple (AAPL)
4. Palantir (PLTR)
5. Meta (META)
6. AST SpaceMobile (ASTS)
7. Lyft (LYFT)
8. AMC Entertainment (AMC)
9. GameStop (GME)
10. Amazon (AMZN)

US futures are continuing to push higher following yesterday’s positive start to the week as markets brace for the result of the US midterm elections and how it could impact political and fiscal policies will pan out over the next two years. The Dow Jones Industrial Average and the S&P 500 are both up 0.4% while the tech-heavy Nasdaq 100 is up 0.7%. The prize up for grabs is control of Congress. Democrats narrowly control both the House and the Senate, but the Republicans are expected to win control of at least the House and could also poach the Senate according to the polls. That would split the government and make it harder for any dramatic policy changes to be pushed through, and could also lead to tighter monetary policy and a curb on government spending in what analysts expect could be more favorable for markets over the long term. A win for the Democrats, however, would mean the party can push ahead with policies and continue with more generous spending that is already succumbing to inflation. Tech is also expected to suffer in this scenario given the Democrat's commitment to overhauling regulation. It could influence how the Federal Reserve acts at its next interest rate decision in December.

Tesla shares are up 0.5% before the bell and are rebounding from their lowest level in 17 months. The electric carmaker has significantly underperformed the market recently as investors react to a myriad of concerns. The sell-off has deepened since CEO Elon Musk completed his takeover of Twitter, which has not only sparked fears that he could spend less time working on Tesla at a challenging time for the business but that he could also draw more scrutiny as he starts to make his voice clear on the platform, having urged undecided voters to back Republicans and split the government ahead of the midterm elections today. Meanwhile, investors are also fretting over the latest Covid-19 restrictions in China, the logistical issues that is making it more difficult to get cars to customers, rising costs that are leading to contracting margins, and concerns that demand could suffer as the economic downturn continues in 2023.

Apple shares are up 0.6% today and holding up despite the warning that iPhone 14 production is suffering from fresh Covid-19 restrictions in China. The company conceded output, including at the biggest iPhone factory in the country, had been impacted. It did not provide any specific numbers, but Bloomberg has reported it could result in at least 3 million fewer units being sold this year than previously expected. Bank of America warned it could knock production by 5 million to 6 million units ‘if the situation does not deteriorate further’. UBS warned the market has not priced in the weaker outlook and that revenue and earnings estimates for this year are ‘too optimistic’. More buoyant brokers suggested any short-term lack of supply will simply defer sales and push them later into the year rather than prompt more people to shift to competitors. Still, the timing couldn’t be worse as we approach the festive shopping season in the final three months of 2022, which is the golden quarter for sales.

Electric vehicle startup Lordstown Motors (RIDE) is up 12% and trading at two-month highs this morning on news that Foxconn, best known for producing iPhones for Apple, has struck a deal to take a near-20% stake in the business for up to $170 million. Foxconn wants to produce electric vehicles on behalf of other companies and replicate the success it has had manufacturing consumer electronics for the biggest brands in the world.

AST SpaceMobile shares are up 2.6% before the bell. The stock has been grabbing the attention of retail traders ever since it was confirmed the company is providing satellite call services to Apple’s iPhone 14, and some are convinced the firm has a lead over rivals by being the first to tap the mass-market by targeting ordinary smartphones, whereas other providers are supplying services through specialized handsets or with the help of expensive hardware. Many are discussing the potential for a short squeeze and claim there is a high level of short interest.

NVIDIA shares are up 2.5% and at their highest level since the start of September today after introducing a new advanced chip that won’t be impacted by the new US curbs on exports to China, helping install confidence that the company can navigate intensifying geopolitical tensions between the two countries. The A800 chip is thought to be the first US chip designed to get around the restrictions. NVIDIA has previously warned that the inability to ship chips to China would wipe hundreds of millions of dollars off its quarterly sales. US chipmakers were told to stop exporting their most advanced chips to China earlier this year. NVIDIA said the A800 started to be produced in the third quarter and acts as a substitute for its existing A100 unit.  

Meta shares are trading marginally lower in premarket trade today. The stock popped higher yesterday as investors welcomed a report from the Wall Street Journal that the social media giant is planning to lay off thousands of workers, helping install confidence that it will get a better grip on rising costs that are causing profits to collapse. Meta has been on a hiring spree since 2020 and its workforce is now almost two times the size compared to before the pandemic started. That comes after CEO Mark Zuckerberg warned the company would need to do more with fewer resources in response to the sharp downturn in demand for advertising. Last month, Meta reported its second consecutive quarter of lower sales and the fourth straight period of lower earnings as its core advertising business suffers from a severe slowdown and it continues to invest billions into its costly metaverse ambitions.

Amazon shares are up 0.7% but still languish near post-pandemic lows. The Economic Times reported Amazon is opening up logistics services for non-Amazon orders in India as it looks to capture rewards from other online retailers across the country. Meanwhile, Bloomberg reported that Amazon could face disruption after UK workers at London-listed packaging giant DS Smith voted to strike over pay. They could walk out before the end of this month after 93% backed industrial action, which could cause problems at one of the busiest times of the year for eCommerce. Union GMB warned a strike ‘could have serious implications across a range of household names, not least Amazon, which gets packaging from the company.’ Amazon has already warned that sales will hit their slowest pace ever for a holiday season in the final quarter of 2022 and further disruption is the last thing it needs.

Digital World Acquisition Corp, or DWAC, is up 2.2% today and building on the 66% jump seen yesterday as companies linked to former president Donald Trump continues to gain ground after he said he will be making ‘a very big announcement’ next Tuesday (November 15), leading to expectations that he could unveil his intention to run for president again in 2024. The blank-cheque firm is in the process of merging with Trump’s company named Trump Media & Technology Group (TMTG), which owns the social media platform TRUTH Social. DWAC has struggled to secure enough approval from its horde of individual investors to get the deal over the line and has had to delay the shareholder vote several times. The latest delay has pushed the vote to November 22. It sent out another reminder late last week urging all shareholders to vote no matter how small their stake and said the company is ‘very close to achieving the required 65% vote’, reigniting hopes that the deal will finally close. Still, with the deadline fast approaching, there is still a risk the deal could collapse and that DWAC will have to return invested funds back to shareholders.

Lyft shares are down 19% before the bell at $11.42 – near the all-time low, we saw in October - after the ride-hailing service added fewer riders than anticipated in the latest quarter, reinforcing concerns that it is ceding market share to its larger rival Uber that posted a rosier update last week. Lyft had 20.3 million active riders in the third quarter, below the 21.1 million forecasts and still lower than before the pandemic hit. ‘The active rider miss is surprising given the strong results we saw from Uber for its Mobility segment,’ said Bloomberg Intelligence analyst Mandeep Singh. Revenue breached the $1.0 billion mark for the first time since the pandemic as higher prices counter softer demand and adjusted Ebitda beat expectations. RBC said the results showed Lyft is at a structural competitive disadvantage after losing market share, while Barclays said the key issue is that it is not executing as well as Uber. Several analysts warned higher insurance costs are also eating into margins and offsetting cost-cutting efforts, having recently announced it plans to cut 13% of its workforce, reducing confidence on profitability. Brokers cut their view on the stock this morning, including Jefferies to $16 from $20, Atlantic Equities to $14 from $24, JPMorgan to $29 from $36, BofA Global Research to $11.50 from $15, while Morgan Stanley and Wedbush both cut their targets to $17 from $25.

Chemicals company DuPont  (DD) is up 2% today despite revealing that profits succumbed to higher costs for everything from materials and energy to logistics. Demand has remained resilient despite the inflationary environment with sales up 4% in the latest quarter, but margins have been hit and EPS fell to $0.73 from $0.75 the year before.

Keep an eye on marijuana stocks today, with Tilray (TLRY) down 1.3% and Canopy Growth (CGC) down 0.9%, as a handful of US states will also be voting on whether to legalize recreational cannabis as Americans head to the polls. There are currently 19 states plus the District of Columbia that allow recreational use, but Arkansas, Maryland, Missouri, North Dakota, and South Dakota could all join the bandwagon.

Disney (DIS) shares are up 0.6% ahead of fourth-quarter results due out after markets close today. Diversity has paid off for Disney in what has proven to be a tumultuous couple of years. The popularity of its films and content during the pandemic, when people were stuck at home during the lockdown, helped prop the company up as it was forced to shut its theme parks and resorts. But today, it is the recovery of its parks and resorts that is helping counter a slowdown from its media and entertainment division. Its streaming services are forecast to add over 12 million subscribers to retake the crown from Netflix. Disney is among the minority of large-cap stocks delivering double-digit growth at a time when most are starting to feel the pressure from deteriorating economic conditions. You can find out what to expect, including all the numbers to look out for, in our Disney Q4 Earnings Preview.

Palantir shares are up 0.4% at $7.05 this morning after sinking over 11% yesterday to hit its lowest level in five months after it released quarterly results that showed revenue grew at its slowest pace since the company went public and the strong dollar hit profits. It said there has been weaker demand for its analytics software in Europe, which has tempered hopes that it can counter uncertainty around government contracts through more work with businesses. Plus, while its outlook for the fourth quarter was rosier than expected, it is now clear that Palantir will fail to deliver its goal of delivering annual topline growth of 30% through to 2025, with this year’s figure guided to increase by just 23%. Brokers lowered their expectations following the results. ‘We see further downside to Palantir with fast decelerating growth and continue uncertainty of government inflection into next year,’ Citi said, adding that it continues to demand a premium over its peers. The broker has a Sell rating and a $6 price target on the stock. Meanwhile, RBC cut its target price to $5 from $6 while Jefferies lowered its view to $9 from $11. Bloomberg Intelligence warned there is limited visibility going forward that ‘could results in a further slowdown if enterprises pare non-discretionary IT spending’.

AMC Entertainment shares are up 0.2% ahead of quarterly results out after the closing bell. The cinema chain has been on a rollercoaster recovery this year thanks to the film slate but, ultimately, fewer people are going to enjoy the big screen than they were before the pandemic. There is still a long way to go before ticket sales return to pre-pandemic levels, and there is an argument that they may never fully recover given the surge in popularity of streaming services and the dramatic shift in viewing habits during lockdown. AMC continues to spend more than it makes, amplifying fears around its debt burden and dwindling cash balance. You can find out what you need to know, including all the numbers to look out for, in our AMC Q3 Earnings Preview.

Video game retailer and fellow meme stock favourite GameStop is down 1.3% in premarket trade.

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