Avoid These 3 Overvalued Reddit Stocks

: TLRY | Tilray Brands Inc. Cl 2 News, Ratings, and Charts

TLRY – Rising inflation and market volatility have been motivating investors to target less expensive stocks that have solid growth potential. And despite a recent meme stock rally, current macroeconomic trends are unlikely to motivate retail traders to continue rewarding overvalued Reddit stocks Tilray (TLRY), Clover Health (CLOV), and Ocugen (OCGN). Given their weak fundamentals, we think these stocks are best avoided now. Read on.

The meme craze has returned over the past few weeks. With approximately 10.40 million users in the popular Reddit forum r/wallstreetbets, many highly discussed stocks could skyrocket like Gamestop, Inc. (GME) and AMC Entertainment Holdings, Inc. (AMC). However, while the GME and AMC rallies were essentially a consequence of short squeezes, that’s not the case with many stocks this time around. One thing is clear from the meme trends so far, however: social media hype is the only reason for their rallies, and they may or may not have much short interest.

However, rising inflation level makes the market highly susceptible to a pullback in the near term. So, with that, investors are opting for value stocks over growth stocks to ensure sustainable returns in the long run. Therefore, meme stocks that have already relied to become overvalued now may not be able to gain further on investor interest.

Reddit stocks Tilray, Inc. (TLRY), Clover Health Investments, Corp. (CLOV), and Ocugen, Inc. (OCGN), which are currently trading at high valuations, are examples of Reddit  stocks that we think could retreat in the near-term. So, obviously, they are best avoided now.

Tilray, Inc. (TLRY)

Based in Canada, TLRY researches, cultivates, processes, and distributes medical cannabis worldwide. The company operates through two segments—cannabis and hemp. It supplies cannabis extract products to patients, physicians, pharmacies, hospitals, governments, and researchers. There have been 19 comments on TLRY in the Reddit chat room and the stock has a sentiment score of 0.104.

On June 8, 2021, TLRY announced the launch of Symbios, a complement to its existing medical brand portfolio in Canada, which  provides a broader spectrum of formats and unique cannabinoid ratios at a better price point. Amid the growing demand for new, high-quality cannabis products that promote health, wellness, and wellbeing, this product is expected to achieve  good market penetration  in the near-term.

For the first quarter ended March 31, TLRY’s revenues decreased 8.5% year-over-year to $48.02 million. The company’s operating loss increased 2.9% year-over-year to $73.31 million. Its net loss came in at $340.96 million for the quarter, which represents an 85.2% year-over-year rise. TLRY’s loss per share increased 16.2% year-over-year to $2.01.

Analysts expect TLRY’s EPS to remain negative in the coming quarters of 2021. The stock’s negative 100.33 forward P/E ratio is consistent with its  bleak earnings outlook. Its five-year PEG ratio is negative 0.46. TLRY has lost 29.5% over the past month and closed Friday’s trading session at $19.89.

TLRY’s POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The stock has a D grade for Value, Stability, Sentiment, Quality and Momentum. We have also graded TLRY for Growth. Click here to access all TLRY’s ratings.

TLRY is ranked #194 of 229 stocks in the F-rated Medical – Pharmaceuticals industry.

Click here to check out our new  Cannabis Industry Report for 2021

Clover Health Investments, Corp. (CLOV)

CLOV operates as a healthcare technology and insurance service company. Through its software platform Clover Assistant, the company provides Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) health plans to Medicare-eligible consumers. Its plans include hospital coverage, doctor visits, and drug coverage. With a sentiment score of 0.117, there have been 100 comments on CLOV on Reddit.

On May 24, 2021, Scott+Scott Attorneys at Law LLP, an international securities and consumer rights litigation firm, announced that they are investigating whether certain directors and officers of CLOV had breached their fiduciary duties to Social Capital Hedosophia Holdings Corp. III (IPOC) and its shareholders. After CLOV closed a merger transaction with IPOC on January 7, 2021, Hindenberg Research later published a report revealing how CLOV was misleadingly hiding governmental investigations from the public. CLOV is likely to witness low sales in the coming months because of these controversies . Also, CLOV is now one of the most heavily shorted stocks across  U.S. Exchanges.

CLOV’s financial prospects are also not promising. For its first quarter, ended March 31, CLOV’s loss from operations came in at $119.09 million, which represents a 347.2% rise from the prior-year period. Its comprehensive loss increased 85% year-over-year to $48.91 million. Its loss per share is reported at $0.13 for the quarter, down 59.4% from the year-ago period.

Analysts expect the company’s EPS to remain negative for the coming quarters. In terms of its forward Price/Book, CLOV’s 8.79x is 94.8% higher than the 4.51x industry average. The stock closed Friday’s trading session at $15.03.

CLOV’s poor prospects are also apparent in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system.

The stock has an F grade for Sentiment and a D grade for Value and Stability. In addition to the POWR Ratings grades we’ve just highlighted, you can see CLOV’s ratings for Growth, Quality and Momentum here.

The stock is ranked #11 of 11 stocks in the B-rated Medical – Health Insurance industry.

Click here to checkout our Healthcare Sector Report for 2021

Ocugen, Inc. (OCGN)

OCGN is a clinical-stage biopharmaceutical company that offers products for improving the body’s ability to regenerate healthy cartilage, joint function, and prevention of degenerative diseases. The company offers a diversified ophthalmology portfolio that includes gene therapies, biologics, and small molecules and targets a range of retinal and ocular surface diseases.

Several law firms have been investigating potential claims against OCGN on behalf of its stockholders regarding concerns  about OCGN’s alleged violation of federal securities laws and/or engagement in other unlawful business practices. An investigation was begun  after OCGN announced on June 10, 2021 that it will no longer pursue an Emergency Use Authorization (EUA) for its COVID-19 vaccine candidate, COVAXIN, and would instead pursue submission of a biologics license application (BLA) for COVAXIN to the U.S. Food and Drug Administration (FDA). The shares of OCGN have been declining since then.

For its first quarter, ended March 31, OCGN’s loss from operations increased 79.6% year-over-year to $7.06 million. The company’s net loss came in at $7.08 million, up 79.4% from the prior-year period. Its loss per share is reported $0.04 for the quarter.

Analysts expect the company’s EPS to be negative for2021. OCGN’s valuation ratios are much higher than its peers. In terms of trailing-12-month EV/Sales, OCGN’s 28.52Kx is 353,151.3% higher than the 8.07x industry average. Its 21.71x trailing-12-month Price/Sales is also significantly higher than the 8.07x industry average. OCGN has lost 36% over the past month and closed Friday’s trading session at $6.34.

It’s no surprise that OCGN has an overall F rating, which equates to Strong Sell in our POWR Ratings system. The stock also has an F grade for Stability, Sentiment and Quality, and a D grade for Value and Momentum. Click here to see the additional POWR Ratings for OCGN’s Growth.

OCGN is ranked #468 of 487 stocks in the F-rated Biotech industry.

Click here to checkout our Healthcare Sector Report for 2021


TLRY shares were trading at $19.22 per share on Monday afternoon, down $0.67 (-3.37%). Year-to-date, TLRY has gained 132.69%, versus a 13.83% rise in the benchmark S&P 500 index during the same period.


About the Author: Sweta Vijayan


Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...


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