Earlier this year, the retail trading community was caught in the limelight after Reddit community WallStreetBets (WSB) induced speculative trading caused several stocks to skyrocket in price. The most notable among them was the GameStop Corporation’s (GME) short squeeze. However, GME could not sustain its rally due to its weak fundamentals.
The retail trading trend has been gaining steam driven by millennial and Gen Z traders’ investments in meme stocks and cryptocurrencies that has been amped up by social media frenzies. The SEC’s former Chairman Jay Clayton believes social media influence on trading is likely here to stay. These traders have been flocking to platforms such as Robinhood Markets, Inc. (HOOD) for commission-free trading. And given the popularity that meme stocks have gained in recent months, Nasdaq Inc. plans to add a retail stock tracker on its website for transparent tracking of retail stock activity.
Driven by retail investors’ sentiments, meme stocks Rivian Automotive, Inc. (RIVN) and Sundial Growers Inc. (SNDL) gained more than 40% in price last week. So, we think it could be worth adding these stocks to one’s watchlist.
Rivian Automotive, Inc. (RIVN)
RIVN is an electric adventure vehicles developer and manufacturer that is based in Irvine, Calif. The company offers electric sports utility vehicles and pickup vehicles. It operates additional facilities in Irvine, Carson; Woking, the United Kingdom; and Vancouver, Canada.
The company went public on the Nasdaq Global Select Market on November 10, 2021, through a traditional IPO process, pricing its 153 million shares of Class A common stock at $78.00 per share. Before deducting underwriting discounts, commissions, and other expenses, the expected gross proceeds from the transaction are approximately $11.90 billion.
On July 23, RIVN announced the closing of a $2.50 billion private funding round, led by Amazon.com, Inc. (AMZN) Climate Pledge Fund, D1 Capital Partners, and Ford Motor Company (F). RIVN has raised $10.50 billion since 2019. Rivian CEO RJ Scaringe said, “This infusion of funds from trusted partners allows Vivian to scale new vehicle programs, expand our domestic facility footprint, and fuel international product rollout.”
The stock has gained 66.5% in price since it went public on November 10 to close Friday’s trading session at $129.95. It has gained 8.2% intra-day.
Sundial Growers Inc. (SNDL)
SNDL produces and markets cannabis products to the adult-use market in Canada. The company distributes inhalable products such as flowers, pre-rolls, and vapes. The company is headquartered in Calgary, Canada.
On November 11, SNDL announced its share repurchase program to repurchase CAD100 million ($79.64 million) of its outstanding common shares. The time-to-time share repurchase is designed to return value to shareholders.
In October, the company agreed with Alcanna Inc., a North American private sector retailer of alcohol, to acquire all its outstanding common shares for approximately $346 million. The acquisition is expected to improve its cash flow and marks its expansion into the liquor industry.
In September, SNDL launched Caviar Cones, under its Top Leaf brand, to reinforce its position as a developer of premium inhalable products in Canada’s cannabis market. The product is the first of its kind in the Canadian market.
For its fiscal third quarter, ended September 30, SNDL’s net income from continuing operations increased 115.8% year-over-year to CAD11.31 million ($9.01 million). Its adjusted EBITDA from continuing operations came in at CAD10.54 million ($8.39 million), up 339% from the prior-year quarter.
The $13.70 million consensus revenue estimate for the current quarter (ending December 2021) indicates a 19.3% year-over-year increase.
SNDL’s stock gained 42.8% in price last week to close Friday’s trading session at $0.92. It has gained 38.6% over the past month.
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RIVN shares were trading at $147.88 per share on Monday afternoon, up $17.93 (+13.80%). Year-to-date, RIVN has gained 46.81%, versus a 26.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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