2 Reddit Stocks Wall Street Predicts Over 50% Rally
Because the recent short squeeze saga has weakened significantly, Wall Street analysts believe two of Reddit’s most talked about stocks – Coinbase Global (COIN) and Corsair Gaming (CRSR) – could generate significant short-term returns. Let’s take a closer look.
The short presses recently triggered millennial investors on Reddit r / wallstreetbets (WSB) have increased the interest of retail investors and Wall Street analysts to follow the stocks discussed on the forum.
While WSB typically targets stocks that are fundamentally weak and have significant short interest, some analysts believe that some of the much discussed stocks in the forum now have sufficient fundamental strength to offer significant returns.
Wall Street analysts are bullish on the outlook for Reddit Coinbase Global, Inc. shares (PIECE OF MONEY) and Corsair Gaming, Inc. (CRSR). They believe both of these stocks could prove to be long-term winners through improving fundamentals, as the prices of both have now come back to earth, providing a better entry point. Let’s explore some details.
Coinbase Global, Inc. (PIECE OF MONEY)
COIN is a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. The company offers an easy-to-use platform to access and trade crypto assets, especially Bitcoins. As of March 31, 2021, COIN had more than 56 million verified users in more than 100 countries, with $ 223 billion in assets on the platform.
COIN was founded in 2012 but was listed as recently as April 14, 2021. COIN listed its shares directly and they opened at $ 381. The stock quickly climbed to $ 429.54, before pulling back below the starting price and reaching a low of around $ 310. However, COIN closed its first trading session at $ 328.28 well above its benchmark price of $ 250.
In the first quarter, COIN expanded the scope of its assets and added support for seven new assets to trade and 13 new assets to hold. In addition, COIN earlier this year acquired New York-based blockchain infrastructure platform as a service (PaaS) company, Bison Trails, and integrated it into its Coinbase Cloud to enable users to send and store cryptocurrencies, accept crypto payments, and build businesses with a crypto-native infrastructure.
In the first quarter (ended March 31, 2021), COIN’s net income was $ 1.6 billion, up 791.7% year-over-year. Its retail monthly transactional users (MTUs) reached 6.1 million, more than doubling from the previous quarter. The operating margin amounted to 54.8%. Its trading volume for the quarter was $ 335 billion, of which Bitcoin contributed 39% while Ethereum contributed 21% of the total volume. COIN reported EPS of $ 3.05.
COIN’s IPO could not have been better timed as crypto asset prices at the time were showing unprecedented strength and have sparked retail and institutional investor interest in the cryptoeconomy in recent months. However, the trend has been reversed of late in the face of Tesla’s (TSLA) refusal of Bitcoin to buy its vehicles, an outright ban from China, and the likelihood of strict crypto regulation in the United States.
Adding to the concern, the COIN platform has experienced technical issues amid the crypto dive. As a result, COIN shares were down nearly 6% intraday yesterday, to close the session at $ 224.80. In fact, the stock has fallen 17% in the past five trading sessions and has fallen more than 30% since its inception. COIN is currently trading 47.7% below its all-time high of $ 429.54. Nonetheless, reddit users are still bullish on COIN and believe the company will be able to effectively deal with the growing competition from new entrants to the crypto economy every month. Out of 12 Wall Street analysts rating the stock, eight gave him a purchase note. The average price target for the stock is $ 404.75, indicating an upside potential of 80% from the current price point.
Corsair Gaming, Inc. (CRSR)
CRSR is one of the world’s leading developers and manufacturers of high performance equipment and technology for gamers, content creators and PC enthusiasts. The company offers peripherals to gamers and creators and supplies gaming components and systems. CRSR sells hardware under its Elgato brand, custom designed controllers for competitive gamers under the SCUF Gaming brand, and builds gaming stations and personalized work products under its Origin PC brand. The company operates in two main segments: Gamer and Creator peripherals, and gaming components and systems.
On May 13, CRSR unveiled a new model in its family of premium Virtuoso gaming headsets, the Virtuoso RGB Wireless XT which connects via super-fast wireless and Bluetooth wireless connection for simultaneous dual wireless connections. . In April, the company launched its One a200 gaming PC, powered by the new AMD Ryzen 5000 series processor, and its One i200, powered by the new 11th generation Intel Core processor. These systems feature NVIDIA’s GeForce RTX 3080, raising the bar for compact PCs ready for gaming and streaming. In addition, CRSR last month launched three new products in its Champion Series line of peripherals that are designed and tested by top esports professionals.
In the first quarter of 2021, CRSR generated net revenues of $ 529.4 million, up 71.6% year over year. Net revenue for its gaming and designer peripherals segment was $ 175.9 million, up 131.9% year-over-year, while revenue from Net business of its gaming components and systems segment was $ 353.5 million, up 51.9% year-over-year. Notably, the company launched 29 new products during the quarter and reported an operating margin of 12.7%. Its adjusted EPS stood at $ 0.58, up 420.4% from the value of $ 0.13 last year.
The CRSR has lost 12% so far this year to close yesterday’s trading session at $ 31.89. Despite the supply constraints of key manufacturing components, the company is confident it will meet strong demand this year. Notably, CRSR management recently raised the financial outlook for its full year 2021 and expects its rapid pace in new product introductions to continue throughout the year. The three Wall Street analysts pricing the stock gave it a Buy a note. The average price target of $ 50.00 indicates upside potential of 56.8% from the current price point.
COIN shares were trading at $ 232.75 per share on Thursday morning, up $ 7.95 (+ 3.54%). Since the start of the year, the COIN has fallen -29.10%, compared to an 11.00% increase in the benchmark S&P 500 during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words led him to become a financial journalist. He started his career as an equity analyst, inventory research and preparation of in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge in financial analysis and investment strategies.
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