Meme stocks are typically driven by a sudden increase in viral activity rather than a company's fundamentals or growth prospects. As a result of a sudden surge in online interest, such stocks typically run up in price significantly within a short period.
Reddit group r/wallstreetbets has become popular among retail traders and investors, where participants discuss equities and options trading. The Reddit forum has helped spark a meme-stock phenomenon again. The renewed investor interest in meme stocks is evident in the Roundhill MEME ETF's 17.1% gains over the past five days.
Given these factors, Wall Street analysts expect widely popular Reddit stocks Upstart Holdings, Inc. (UPST), Peloton Interactive, Inc. (PTON), Wheels Up Experience Inc. (UP), ironSource Ltd. (IS), and Rivian Automotive, Inc. (RIVN) to surge in price in the coming months.
Upstart Holdings, Inc. (UPST)
UPST in San Mateo, Calif., is a lending company that operates a cloud-based artificial intelligence (AI) lending platform in the U.S. The company's platform aggregates consumer demand for loans and channels it to the company's AI-enabled bank partners. It connects consumers, banks, and institutional investors through a shared AI lending platform.
Yesterday, UPST entered a partnership with Sharonview Federal Credit Union, a leading credit union that serves more than 100,000 members in the Carolinas and nationwide, to offer AI-powered personal loans to the latter’s members. Sharonview will be part of the Upstart Referral Network, available at Upstart.com. With the Upstart Referral Network, Sharonview will be able to reach more members. This partnership is expected to boost UPST's business growth and profitability.
Earlier this month, UPST announced Upstart AI Lending for Salesforce on Salesforce AppExchange, a leading enterprise cloud marketplace. "With Upstart AI Lending for Salesforce, financial institutions have access to a better, 360-degree view of the customer. This integration with Financial Services Cloud enables financial institutions to deliver the most modern personal lending experience anywhere, regardless of their size or geography," stated Michael Lock, SVP of Lending Partnerships for Upstart.
UPST's total revenues increased 155.6% year-over-year to $310.14 million in its fiscal year 2022 first quarter, which ended March 31, 2022. Its income from operations rose 123.7% year-over-year to $34.83 million. Its adjusted EBITDA improved 198.1% year-over-year to $62.59 million. In addition, the company's adjusted net income and adjusted net income per share came in at $58.62 million and $0.61, respectively, registering an increase of 193.9% and 177.3% year-over-year.
Analysts expect UPST's revenue for its fiscal year 2022, ending Dec. 31 2022, to come in at $1.25 billion, indicating a 47.9% increase year-over-year. Also, the $2.56 consensus EPS estimate for its fiscal 2023 represents a 39.1% rise from the previous year. It is no surprise that it has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of UPST have gained 41.1% in price over the five days and closed yesterday's trading session at $48.34.
Among the 13 Wall Street analysts that rated UPST, three rated it Buy, eight rated it Hold, while two rated it Sell. The 12-month median price target of $53.46 indicates a 10.6% potential upside. The price targets range from a low of $20.00 to a high of $88.00.
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Peloton Interactive, Inc. (PTON)
New York City-based PTON provides interactive fitness products in North America and internationally. The company offers fitness products with streams of live and on-demand classes. In addition, it offers connected fitness subscriptions for users and access to various live and on-demand classes through the Peloton Digital app for connected fitness subscribers. PTON has more than 6.7 million members. It sells its interactive fitness products directly through its retail showrooms and at onepeloton.com.
In February, PTON announced a series of initiatives, including Realigning business operations, improving the economics of its hardware (developing its Peloton Output Park (POP) manufacturing plan), and enhancing capital and operational efficiency. Once these actions are implemented fully, the company expects to achieve at least $800 million in annual run-rate cost savings. In addition, its planned capital expenditures in 2022 are expected to be reduced by approximately $150 million.
In its fiscal 2022 third quarter, ended March 31, 2022, PTON's subscription revenue increased 54.5% year-over-year to $337.50 million, while its gross subscription profit improved 63.2% from its year-ago value to $252.10 million. The company's net cash provided by investing activities and net cash provided by financing activities came in at $223 million and $1.31 billion, respectively, over the nine-month period ended March 31.
The $3.80 billion consensus revenue estimate for its fiscal year 2023, ending June 2023, represents a 4.6% improvement from the previous year. Analysts expect PTON's EPS for the next year to improve 57.1% year-over-year. Over the past five days, the stock has increased marginally and closed yesterday's trading session at $14.42.
Among the 27 Wall Street analysts that rated PTON, 15 rated it Buy, 10 rated it Hold, while two rated it Sell. The 12-month median price target of $22.58 indicates a 56.6% potential upside. The price targets range from a low of $11.00 to a high of $40.00.
Wheels Up Experience Inc. (UP)
UP in New York City is the provider of private aviation services primarily in the United States. The company offers a wide range of products and services, including multi-tiered membership programs, on-demand flights across various private aircraft cabin categories, retail and wholesale charter, corporate flight solutions, aircraft management, special missions, whole aircraft acquisitions, and sales, and commercial travel. UP operates a fleet of more than 1,500 aircraft.
Last month, UP completed its acquisition of Air Partner plc, a U.K.-based aviation services group. Under the terms of the transaction, it has acquired the entire issued share capital of Air Partner for 125 pence per share, equivalent to an enterprise value of $109 million approximately. The acquisition adds group charter, freight, and safety & security services to UP's portfolio. Further, it accelerates the company's global expansion.
UP's revenue increased 24.5% year-over-year to $325.64 million in the fiscal 2022 first quarter ended March 31, 2022. Its flight revenue per live flight leg improved 7.6% year-over-year to $325.64 million. In addition, the company's total other income amounted to $3.68 million for the first quarter.
The $366.16 million consensus revenue estimate for its fiscal 2022 second quarter, ending June 30, 2022, represents a 28.2% improvement from the same period in 2021. The company has an impressive revenue history as it has surpassed the consensus revenue estimates in each of the trailing four quarters.
The stock has plunged 18.8% in price over the past month and closed yesterday's trading session at $2.50.
Among the 7 Wall Street analysts that rated UP, four rated it Buy, two rated it Hold, while one rated it Sell. The 12-month median price target of $5.57 indicates a 122.8% potential upside. The price targets range from a low of $2.40 to a high of $8.00.
ironSource Ltd. (IS)
Headquartered in Tel Aviv-Yafo, Israel, IS operates a business platform for app developers and telecom operators in Israel and internationally. The company's platforms include the Sonic solution suite, which provides solutions for app discovery, user growth, content monetization, analytics, and publishing to support developers launch, monetize, and scale their apps and games, and the Aura solution suite, which supports telecom operators to enrich the device experience.
On May 4, IS launched Luna Views, which allows customers using the ironSource Luna app to create custom dashboards to analyze cross-channel app marketing campaign performance and optimize accordingly. This provides app marketers instant visibility into critical campaign metrics with a customizable data view. This new feature might extend the company’s customer reach and boost growth.
On April 26, IS announced the continuation of its mediation partnership with Tilting Point, a leading free-to-play games publisher. Under a three-year deal, Tilting Point is using IS' LevelPlay for more than 95% of its app titles that support ads. "We’ve invested heavily in products designed to empower developers with more tools intended to drive business growth, and it’s great to see Tilting Point leveraging multiple solutions on our platform to increase revenue for their game developers,” said Nimrod Zuta, VP of Product at IS.
In its fiscal 2022 first quarter, ended March 31, 2022, IS' revenue grew 58.4% year-over-year to $189.67 million, and its non-GAAP gross profit increased 54.6% year-over-year to $161.50 million. Its adjusted EBITDA improved 48.7% from its year-ago value to $58.81 million. The company’s non-GAAP net income and non-GAAP net income per ordinary share amounted to $55.80 million and $0.05, respectively, registering a rise of 59.9% and 25% year-over-year.
Analysts expect IS’ revenue for its fiscal year 2022 second quarter, ending June 30, 2022, to come in at $183.22 million, indicating a 35.7% increase year-over-year. Also, the $0.04 consensus EPS estimate for the same quarter represents an 11.8% rise from the same period last year. IS has surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past five days, the stock has gained 3.4% in price and closed yesterday's trading session at $2.76.
Of the 10 Wall Street analysts that rated IS, nine rated it Buy, while one rated it Hold. The 12-month median price target of $7.00 indicates a 153.6% potential upside. The price targets range from a low of $5.00 to a high of $13.00.
Rivian Automotive, Inc. (RIVN)
RIVN in Irvine, Calif., designs, develops, manufactures, markets, and sells electric vehicles and accessories in the United States. The company offers pickup trucks and sports utility vehicles. RIVN also provides Rivian Commercial Vehicle in collaboration with Amazon.com for an electric delivery van. It sells its products directly to customers in the consumer and commercial markets.
In May 2022, RIVN, together with the Georgia state and local authorities, finalized and signed an economic development agreement to move forward on its second domestic manufacturing facility, located in Georgia, and offers RIVN a total incentive package of $1.5 billion. The new facility will be the production site for its R2 platform, an accessibly priced mid-sized SUV targeting global markets. This development might meet the company’s sustainability goals and boost its business growth and revenues.
RIVN's revenue amounted to $95 million in its fiscal 2022 first quarter, ended March 31, 2022. Its net other income came in at $5 million. In addition, the company’s cash and cash equivalents and total current assets amounted to $16.43 billion and $17.05 billion, respectively, as of March 31, 2022.
The $604.52 million consensus revenue estimate for its fiscal 2022 third quarter, ending Sept. 30, 2022, represents 60,352.4% growth from the prior-year period. Analysts expect RIVN's EPS to rise 78.9% year-over-year for the next quarter.
Shares of RIVN have increased marginally in price over the past five days and closed yesterday's trading session at $27.29.
Among the 15 Wall Street analysts that rated RIVN, nine rated it Buy, while six rated it Hold. The 12-month median price target of $50.46 indicates an 84.9% potential upside. The price targets range from a low of $24.00 to a high of $108.00.
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UPST shares were trading at $51.94 per share on Thursday afternoon, up $3.60 (+7.45%). Year-to-date, UPST has declined -65.67%, versus a -17.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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