WallStreetBets Stock Tips October Week 2 Roundup

Every week we bring to you some of the fundamentally strong and reasonably valued stocks that are popular on Reddit group WallStreetBets. Here are the five best WallStreetBets stocks that you can buy now.

Meanwhile, WallStreetBets is not as popular as it was in the first quarter of 2021. However, the group has still been instrumental in triggering short squeezes in some stocks.

1. Affirm (NYSE: AFRM)

BNPL (buy-now-pay-later) company Affirm is among the most popular WallStreetBets stock. The fintech company, which was originally looking to IPO last year eventually listed earlier this year. However, the stock has whipsawed since the listing. Firstly, it was engulfed in the terrible sell-off in growth names. The reports of Apple entering the BNPL market only added fuel to the fire.

However, then came the flurry of good news. Square acquired fintech startup Afterpay at a premium which changed the sentiments towards the BNPL industry. Affirm’s deal with Amazon, under which its BNPL solutions would be available to select Amazon customers, also led to a buying spree in Affirm stock. Affirm’s earnings were also better than expected and the stock soared after the release.

Why WallStreetBets loves Affirm stock

WallStreetBets traders are bullish on Affirm due to the positive outlook for BNPL. Also, the company’s deal with Amazon has made traders bullish on this fintech stock. The deal with Amazon could be a game-changer for Affirm. JPMorgan Chase estimates that the 2022 GMV for Amazon could be $500 billion which is almost 40 times the GMV that AFRM is projecting for its fiscal year 2022.

Meanwhile, after the recent surge, where it is now approaching its 52-week highs, Affirm stock has now run ahead of its target price and currently trades 11% above the median target price. However, the street high target price of $150 implies an upside of 12% over current prices.

All said, given the growing popularity of BNPL, Affirm looks among the best WallStreetBets stocks to buy for the long term. However, the stock now trades at an NTM (next-12 months) EV (enterprise value)-to-sales multiple of over 30x which is a bit high for comfort. However, if the company’s deal with Amazon is expanded to most customers, its revenues might increase multifold.

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2. Coinbase (NYSE: COIN)

While WallStreetBets has a strict policy of not discussing cryptocurrencies, crypto exchange Coinbase is currently among the most popular WallStreetBets stock. Coinbase stock has been in focus amid the growing craze for cryptocurrencies. Wall Street analysts have also been taking a bullish view of the stock. COIN is among those rare names where WallStreetBets traders and Wall Street analysts have convergent views.

WallStreetBets loves stocks and COIN stock too

Coinbase is the closest that WallStreetBets has come to crypto assets. Meanwhile, COIN is among those WallStreetBets stock that looks like good buys. Earlier this week, Goldman Sachs also issued a bullish note on Coinbase stock and said “We expect the focus of the call to be around the regulatory environment and whether there are any signs that other new products on the crypto side could be at risk from the tightening regulatory backdrop, although we believe street models weren’t baking in much in this regard.”

Overall, while some of the WallStreetBets stock looks quite overvalued, COIN looks like a reasonably valued stock. It could be a good name to have in your portfolio considering the growing popularity and adoption of cryptocurrencies.

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3. Alibaba (NYSE: BABA)

Alibaba stock has been in freefall this year. China’s tech crackdown, the Evergrande crisis, and the specific targeting of China by the Communist government have led to a decline in the stock. Meanwhile, BABA has been a popular WallStreetBets stock for quite some time now.

WallStreetBets magic hasn’t been working in BABA stock

Meanwhile, despite it being a popular WallStreetBets stock, BABA stock has been hitting new lows. Here it is worth noting that given its massive market cap of almost $400 billion, WallStreetBets members might not be able to impact the price action of Alibaba. Usually, the group has been successful in triggering a short squeeze in smaller companies that have a high short interest.

Also, markets have been quite bearish on Alibaba stock. The company’s listing status in the US is itself under scrutiny under the new US laws. Also, the fact that the company is structured as a variable interest entity is also adding to the skepticism. Last week, Raymond James became the first major brokerage to downgrade BABA stock over growth concerns. However, despite so much happening with the stock, Wall Street analysts played a wait and watch approach.

BABA stock valuation

All said, while there are several risks of investing in BABA stock and more pain could lie ahead for investors, the valuations are quite tempting at these levels. BABA stock trades just about 12.5x its fiscal 2023 earnings. The current valuations are the lowest since the company was listed.

If you are willing to take the extra risk and can patiently hold BABA stock for at least five years, it looks among the best WallStreetBets stock to buy in October. However, brace for volatility amid the continued crackdown in China.

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4. Facebook (NYSE: FB)

Facebook is not your typical meme stock and is a mega-cap company having a market cap of almost a trillion dollars. Meanwhile, the stock has been under a pressure over the last month. The company has had to call off the teen version of Instagram. Frances Haugen, a whistleblower who joined Facebook in 2019, has revealed that the company prioritizes profits above everything else.

What makes FB a popular stock on WallStreetBets

Facebook’s valuations appear reasonable which makes it a popular stock on WallStreetBets. While some of the members are concerned about the company’s policies, many others see it as a good investment.  Wall Street analysts meanwhile are mixed on FB stock. Nancy Tengler of Laffer Tengler Investments is among those who are apprehensive of Facebook stock amid the recent issues.

“We’re happy to own it given the valuation – it’s super cheap on a relative price-to-sales ratio basis – but I do think you have to be wary,” said Tengler. She added, “It’s going to sit here for a while. Think about Microsoft when it went through the antitrust lawsuit [in 2001]. This could take some time so I wouldn’t jump in here, I’d let it settle.”

However, Ari Wald, who heads technicals at Oppenheimer has a differing view and sees the dip in the stock as a buying opportunity. That said, given the strong position that Facebook has in the social media industry, it is one of the best WallStreetBets stocks to own. While WallStreetBets members might not be able to impact the stock’s price action, it nonetheless looks like a good buy based on the fundamentals.

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5. Tilray (NYSE: TLRY)

Tilray has been another popular WallStreetBets stock. The cannabis company posted its earnings yesterday. It reported net revenues of $168 million in the fiscal first quarter of 2022 which were 43% higher than the corresponding quarter last year. The company posted an adjusted EBITDA of $12.7 million in the quarter which was 58% higher than the corresponding quarter last year.

The company has posted positive adjusted EBITDA for 10 quarters but is still struggling to become profitable on the net profit level. In the fiscal first quarter, it reported a net loss of $34.6 million. However, the synergies post-Aphria merger would help the combined company reach profitability sooner.

WallStreetBets loves TLRY stock

Meanwhile, Tilray is working on an aggressive growth plan for the company and wants to quadruple its revenues to $4 billion by the end of the fiscal year 2024. The company is working on both organic and inorganic growth. Tilray is currently among the top trending stocks on WallStreetBets after its earnings. The stock was popular on the group before the Aphria merger also and Reddit traders triggered a massive short squeeze in the stock.

Overall, if you are looking to buy a good cannabis stock, Tilray looks like a good bet. It trades at an NTM EV-to-sales multiple of just under 7x which looks reasonable.

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