WallStreetBets (WSB) is one of the most popular Reddit communities, known for taking bets on heavily shorted stocks. It rose to global prominence after its heavily rewarding bets of GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC).
The community’s rise in strength could be attributed to the influx of a new generation of retail investors after the pandemic. The stocks discussed on the WallStreetBets platform often have nothing to do with solid fundamentals or high growth prospects and surge based on investors’ optimism. As a result, meme stocks are highly speculative and risky.
Given this backdrop, we think it could be wise to avoid WallStreetBets stocks Clear Secure, Inc. (YOU), ContextLogic Inc. (WISH), and Wheels Up Experience Inc. (UP) in the near term. These stocks are fundamentally weak, and their growth prospects look bleak.
Clear Secure, Inc. (YOU)
YOU is a secure identity company that creates a frictionless travel experience while enhancing homeland security. The company’s secure identity platform used biometrics to automate the identity verification process through CLEAR lanes in airports and helped make the travel experience safe, predictable, and trusted for both members and partners. It serves the aviation and travel, hospitality, live sports and entertainment, and healthcare markets. It has received 23 mentions in the WSBs over the past 24 hours.
YOU’s adjusted EBITDA loss for the fiscal third quarter ended September 30, 2021, came in at $14.47 million, compared to an adjusted EBITDA of $14.04 million. The company’s net loss came in at $32.78 million, compared to a net income of $11.14 million. Also, its operating expenses increased sales and marketing expenses increased 202.3% year-over-year to $9.94 million.
Analysts expect YOU’s EPS to remain negative for this year and next year. Over the past six months, the stock has lost 50.7% to close the last trading session at $22.28.
YOU’s weak fundamentals reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a D grade for Growth, Momentum, Stability, and Sentiment. In the F-rated Software-Security industry, it is ranked #19 out of 27 stocks. Click here to see the other ratings of YOU for Value and Quality.
ContextLogic Inc. (WISH)
WISH is a mobile electronic commerce company that provides a discovery-based shopping platform, which connects merchants’ products to users based on user preferences. The company provides the merchants with a suite of services, including demand generation and engagement, user-generated content creation, data intelligence, and business operations support. It has received 33 mentions in the WSBs over the past 24 hours.
On November 24, 2021, the French government ordered search engines and online platforms to remove WISH from their listings due to concerns over product safety. The French government’s consumer watchdog had found that many products listed on the WISH site were dangerous. According to the government, WISH had failed to recall the products properly and clearly inform the consumers about the risks associated with some of the products sold on its platform.
For the fiscal third quarter ended September 30, 2021, WISH’s revenue decreased 39.2% year-over-year to $368 million. The company’s gross profit declined 54.2% year-over-year to $167 million. In addition, its current assets for nine months ended September 30, 2021, came in at $1.31 billion, compared to $2.31 billion for the fiscal ended December 31, 2020.
Analysts expect WISH’s EPS to remain negative for this year and next year. The company’s revenue for the quarter ending December 31, 2021, is expected to decrease 60.5% year-over-year to $313.47 million. It failed to surpass the Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has lost 91.8% to close the last trading session at $2.31.
WISH’s weak prospects are reflected in its POWR Ratings. It has an overall D rating, equating to a Sell in our rating system.
It has a D grade for Stability and Sentiment. Within the F-rated Internet industry, it is ranked #55 of 76 stocks. To see the additional ratings of WISH for Growth, Value, Momentum, and Quality, click here.
Wheels Up Experience Inc. (UP)
UP is a private aviation company. It is developing data and technology-driven solutions that connect consumers to safety-vetted and verified private aircraft. The company’s offerings consist of products and services, including multi-tiered membership programs, on-demand flights across private aircraft cabin categories, aircraft management, retail and wholesale charter, corporate flight solutions, and others. It has received 13 mentions in the WSBs over the past 24 hours.
UP’s net loss for the fiscal third quarter ended September 30, 2021, came in at $59.45 million, compared to a net income of $20.54 million in the year-ago period. The company’s adjusted EBITDA loss increased 198.1% to $23.92 million. Also, its general and administrative expenses increased 192.1% to $42.49 million.
UP’s EPS for this year and next year is expected to remain negative. Over the past year, the stock has lost 67.7% to close the last trading session at $3.39.
UP’s POWR Ratings reflect these bleak prospects. It has an overall D rating, equating to a Sell in our rating system.
It has a D grade for Growth, Stability, and Sentiment. It is ranked #27 of 30 stocks in the F-rated Airlines industry. Click here to see the additional ratings of UP for Value, Momentum, and Quality.
YOU shares were trading at $24.37 per share on Monday afternoon, up $2.09 (+9.38%). Year-to-date, YOU has declined -22.31%, versus a -5.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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