Jun 18 2021 (Fri)
These stocks were all posted by the user “WallStreetWhale” in a portfolio in which he aims to analyze “hype” stocks to find their underlying value and determine if they are worthwhile investment ideas. So, without further ado, here is a post he wrote up for our blog:
In this blog post I will be highlighting the 7 stocks that I have currently analyzed in my “hype” stocks portfolio. I chose these stocks largely based off of their high relative volumes and their positive social sentiments. The stocks that make up the portfolio have no significance with each other, so I did not construct this set of ideas as a rounded portfolio, I chose them based off of hype and hype alone. These investments are inherently risky, so I would highly suggest that you do your own research before deciding if you would like to invest in any of these. If you would like to see the individual performances of these stocks, and the overall performance of all the stocks, view my profile here.
Many of these stocks have been talked about consistently and in large volumes on Reddit. If you would like to see the most talked about stocks on Reddit and their overall sentiment on Reddit, Utradea has a great Reddit Scanner in their “Ideas” tab.
Recently, there has been a lot of hype with both SPAC’s (Special Purpose Acquisitions) and EV’s (Electric Vehicles), and Churchill Capital delivers the best of both worlds. Churchill Capital is expected to be merging with Lucid Motors on July 23rd. This SPAC was one of the most hyped SPAC’s of 2021, rising from $10/share (before the rumours started) to a high of $64.86/share (after the news broke). Currently, Churchill Capital resides at about $24/share and provides investors with a chance to get in early on what could be the next huge EV company.
Lucid Motors was founded in 2007 in California and has sold/developed their electric powertrains and batteries since. By 2013, Lucid became one of the most respected battery pack producers and jokingly thought of creating their own EV. In 2016, Lucid Motors took this idea seriously, and by 2020 they finished phase 1 of construction on their factory. Lucid plans to start manufacturing their vehicles this year (2021) and they look sleek.
Lucid has partnered with companies such as Electrify America, ChargePoint, and EVgo in order to use their already built infrastructure of EV charging stations, so that Lucid can focus solely on their vehicles. Additionally, Lucid also has industry leading technology and is set to become the first American EV producer to have a 500+ mile battery.
According to my DCF model (based off of Lucid’s projections), Churchill Capital (Lucid) should have a fair value of $29.86, which would represent an upside of over 25% from current prices ($23.80).
This is just the tip of the iceberg, and if you want to continue reading about Lucid’s merger deal, technology, business model, and other information, then click here.
To many the gaming and mobile gaming industry represents a great opportunity for growth, however, for investors to capitalize on this growth they must find the company that is best fit to grow the most in sed industry. Too many large gaming companies have released similar games as their competitors and even themselves, and these companies have used similar business models for too long. However, there is one gaming company that is going against the norm and has revolutionized the gaming and mobile gaming business model. This company is none other than Skillz.
Skillz has recognized that there is an increasing amount of mobile game developers, however, there has not been a similar increase in the number of jobs available for these developers. Skillz has also noticed that there are more developers who are trying to make their own games but have not had the success that they were hoping to have due to the low exposure they were receiving. Skillz took these factors into account when designing their business and gives these developers a way to make their own video games, get the exposure they deserve, and get a cut of the pay according to the popularity of their games.
Additionally, Skillz offers cash games in which their customers/players put their money on the line in a 1v1 competition against a random (skill-matched) opponent. If a player wins, they win majority of the money pool, however a small cut goes to the developer, and a small cut goes toward skills. Skillz business model is a win-win-win, as developers get paid for making their games, gamers get paid for beating their opponents, and Skillz gets paid for making it all happen.
According to the comparable analysis that I created for my analysis, Skillz is currently undervalued and has a price target of $25.31, which would imply an upside of 34.77%.
This is just a summarization of Skillz, and there is a lot more to read/know about their business and their future, if you are interested in continuing reading, then click here
I do not know about you, but so far in 2021 I have heard the term “____ to the moon” an unbearable number of times. Typically, I will hear this phrase from uneducated redditors on Wall Street Bets, or people on social media trying to promote their garbage cryptocurrencies. However, what if I were to tell you that there is one company that is planning on taking people to the moon? Surely their stock would go to thee moon as well. Right. Right? I was lying, there is no company taking people to the moon, but there is a company doing the next best thing… taking high net-worth individuals (and eventually not so high net-worth individuals) into space. This company is Virgin Galactic, and their ticker is $SPCE.
Virgin Galactic is an aerospace company that is pioneering human space flight for curious individuals and researchers alike. Virgin Galactic has spent the last decade testing and perfecting their proprietary and reusable rockets, which they plan to use in order to house their “future astronauts”. Virgin galactic sees a huge opportunity in the future of commercializing space flight and plans to have the first mover advantage in the space (HA! Get it? “Space”, alright, alright, cannot please everybody.)
Thus far, Virgin Galactic currently has over $80M in deposits from over 600 people, in order for them to go to space. However, Virgin Galactic has to receive their last 2 FAA approvals before they can start chipping away at this backlog of customers. Virgin Galactic has laid out the strategy they plan to use to meet their future expectations, this strategy involves developing a commercial program for Human Spaceflight, expanding their fleet of rockets, lowering their launching/manufacturing costs, and leveraging their proprietary technologies.
Through my comparable analysis, I was able to arrive at a fair value of Virgin Galactic of $26.25/share, which would result in a downside risk of 28.67%. However, Virgin Galactic is unique in their business model, so this comparable probably does not have much “weight”. What I mean by that is that it is most likely not terribly accurate, so take it with a grain of salt.
This analysis still has a lot of information to “explore”, and if you would like to continue reading click here.
At the beginning of 2021, there was a lot of conflict between retail investors on reddit and hedge funds over a proclaimed “meme” stock, $GME – GameStop. During this “conflict”, there were also some redditors who pumped other stocks like $BB – Blackberry, and $AMC – AMC Entertainment. If you kept up with all of this “drama” you probably have heard of another reddit stock, that goes by the name $NAKD – Naked Group. Ever since it is debut on reddit, the hype around this stock has been crazy, and I wanted to see if this hype was warranted.
Naked Brand Group is a intimates, sleepwear, loungewear, costumes, and swimwear brand based out of Australia. Recently, Naked has switched their business model from in-person retail locations in malls, strip malls, and storefronts, to an almost fully online approach. Due to their previous in-person nature, Naked was hit hard by the effects of COVID and hopes to bounce back through their online presence.
One of Naked’s biggest subsidiaries is Frederick’s of Hollywood (FOH). FOH has been in this space since 1946 and has provided many innovations such as the push-up bra. FOH is a very recognizable brand in this space and is one of Naked’s biggest e-Commerce drivers.
Through my comparable analysis, I found that Naked should have a share price of $0.51, which would imply a share price decrease of 23.88%. However, there are a couple of ways in which this comparable could be discredited to a certain extent.
If this summary has caught your attention, and you want to read more, click here.
Similar to the “to the moon” phrase I mentioned previously, we also have this gem of a phrase that has gained popularity recently “buy the dip”. Too many times people are buying dips that just keep dipping, and then become a bag holder. However, there is one company that has dipped over 64% since February 4th. This stock is Workhorse ($WKHS), and this analysis was conducted in order to see if this is a dip worth buying, and if the company has merit.
Workhorse is primarily an American electric delivery truck manufacturer; however, they also develop, design, and manufacture their HorseFly delivery drones. The reason why Workhorse was so highly valued on February 4th is that they were in contention (and the heavy favourite) to win the USPS Next Generation Delivery Vehicle Project contract. This contract would guarantee that USPS would have purchased 165,000 of their vehicles, and there would be a sense of legitimacy in Workhorse vehicles if USPS selected them. However, to many people’s surprise USPS announced on Feb 5th that Oshkosh Defense was the winner of this contract, immediately obliterating Workhorse’s stock value.
Although they did not win the contract, they have recently contested the decision, in hopes of overturning it and winning the contract. This helped to give Workhorse a 2nd wind, however aside from this contract what value does Workhorse have? Workhorse has a couple of strategic partnerships with Duke Energy to help with the adoption of Workhorse’s vehicles at a factory/industrial/depot level, and they have a partnership with Moog for the development of their HorseFly drones. Workhorse is still making large moves and positioning itself to become competitive in the Electric Delivery Vehicle with or without the contract. However, their future is in the air, and it is not the safest investment in this portfolio.
Through my comparable analysis, I arrived at a fair value of Workhorse of $15.93/share, given their current price of $14.50 this represents an upside of 9.86%. Furthermore, this is pretty accurate given the average analyst price target is $15.70, which implies an upside of 8.28%.
To continue reading this analysis of Workhorse click here.
Often labelled as the “Tesla of China”, Nio is often overlooked by investors, who are missing out on their large potential. Nio is so much more than just the “Tesla of China” as they have taken a new approach to the EV business model.
Nio is a Chinese EV manufacturer (as I imagine you have already guessed) that has a unique business model, and different ideas/visions than Tesla does. Firstly, Nio has pioneered what is called “battery swapping”, in which their vehicle owners can pull into one of their “swapping stations” and get their old/low battery swapped for a new/fully charged battery to spend less time off of the road. Nio has made this service available to their customers through a subscription model deemed “Battery as a Service”. Furthermore, Nio plans to be Tesla’s only rival when it comes to self-driving capabilities (currently), as they recently announced “Nio Autonomous Driving” (NAD) capabilities that will be available through another subscription model. Lastly, Nio has also announced their 150-kWh battery, which is said to reach between 850-900 km on a single charge. If Nio is able to pull this off they will have the farthest single-charge distance by far.
Through my comparable analysis, I was able to find the fair value of Nio to be $47.03, which is exactly where it is at during the time of writing this article. Nio having so much room for growth and insane potential, while being at/near fair value represents a great buying opportunity.
I was not able to get nearly as much information into this summary as I would have liked, however if you want to read the full analysis click here.
Tesla is the grandfather of Electric Vehicles and has paved the way for new EV companies to come up, and for the conversion of legacy automakers to transition into the EV space. Love them or hate them, Tesla has revolutionized the automotive industry. Tesla is unlike all of the other hype stocks on this list, as it has been hyped for the past 2-3 years. However, is this sustained hype valid? Or is Tesla highly overvalued? Let’s take a look!
As we know, Tesla designs, develops, manufactures, and sells their EV’s directly to their customers. Tesla has stated that their main goal is to reduce the cost-of-ownership to accelerate the adoption of EV’s to transition the world to more sustainable means of transportation. Tesla has two main segments of their business their Vehicle segment, and their Electricity Generation/Storage segment.
Their Energy Generation and Storage segment consists of mainly solar panels in both the commercial and consumer spaces. This segment brought in revenues of $2B, however the cost of revenues was $1.92B, which represents an unfavourable margin of 1%. Their margins on this segment are not great, however, it is a relatively new segment and has the potential to grow and become more profitable in the future.
Tesla’s other segment, and their most recognizable segment is their EV manufacturing. Tesla currently has 4 models available, their S, 3, X, and Y, and has plans to release their Cybertruck, Semi and Roadster models in the future. This segment brought in revenues of $29.54B in 2020, and their cost of revenue was $22.93B, which represents a margin of 26%. Overall Tesla would not be a profitable company if it were not for their income from regulatory credits ($1.6B), which you can read more about in the full analysis.
Tesla prides themselves on having the best technology in the business, which can be seen especially through their Full Self-Driving (FSD) capabilities, powertrains, and battery technology.
Through my DCF and comparable analyses, I found that Tesla was insanely overvalued, however there were many flaws with these methods, as stated in my full analysis. For these reasons I am not going to state a price target because it is so hard to value Tesla. However, it may be wise to accumulate on dips, or dollar cost average if you are bullish on Tesla.
Once again, there is so much more to this analysis, and I would recommend taking some time to read it here.