Images of soaring prices and investor gains may immediately come to mind when we think of the stock market. And while this is often the reality, there are also times when markets undergo periods of decline or bear markets. Interestingly, these bear markets can sometimes work in favor of investors, resulting in undervalued stocks to buy. This is because during down markets, retail investors, like those on the popular social media platform Reddit in particular, become more conservative with their investments. They tend to flock toward stable and well-established companies. As a result, stocks from newer companies — often perceived as riskier ventures — may be undervalued during these times.
So if you’re looking for promising undervalued Reddit stocks to buy, now may be the perfect time to explore your options and invest in some of the top companies on this popular online platform. Whether you’re looking for fast-growing startups or established giants with proven track records, there’s sure to be a Reddit stock that fits your investment goals and budgetary needs.
So, explore the following eight undervalued Reddit stocks today — they might pay off big time in the long run.
Undervalued Reddit Stocks: Robinhood (HOOD)
Robinhood (NASDAQ:HOOD) is a commission-free online broker that has become very popular with young investors. The company has been growing rapidly and has up to 22.9 million as of June 2022. Alongside the broader markets, Robinhood lost considerable market value in the last six months. However, there are secular trends in Robinhood’s favor, which will help the stock mount a comeback.
Robinhood’s average user age is 28-41, meaning that a big part of the customer base skews younger than the traditional stock broker. Morgan Stanley (NYSE:MS) believes the platform can become the Charles Schwab for millennials and Generation Z. It is high praise but not unfounded. The younger generation wants convenience with their trading and gets it through applications like Robinhood.
For now, investors are cautious because of the wider economic downturn, leading to negative sentiment surrounding the stock. However, it will not always remain this way. Many analysts believe we might see the back of this bear market by December 2022 or sooner. Regardless, the economy’s boom and bust cycle suggests we could be out of the woods soon. That will mean more growth for Robinhood moving forward.
In the meantime, Robinhood is adding to its platform and offerings. Despite cryptocurrencies being down since the start of the year, Robinhood has continued adding more coins you can buy. Now you can purchase Aave (AAVE-USD), Tezos (XTZ-USD), and USCoin (USDC-USD) aside from the usual hitters in the crypto space.
DocuSign (NASDAQ:DOCU) is a rapidly growing company that specializes in electronic signatures and document management. With its easy-to-use platform and reliable technology, DocuSign has quickly become one of the leading e-signature providers in the industry. And with its rising popularity among businesses around the world, DocuSign is also becoming an increasingly attractive investment opportunity. So if you’re looking for undervalued Reddit stocks to buy and hold over the long term, DocuSign should be at the top of your list.
DocuSign curried favor with investors and users alike during the pandemic. Whether signing a contract or filing your taxes online, DocuSign became the go-to solution for seamlessly managing digital workflows.
As a result, the company experienced tremendous revenue and user base growth. Over the past three fiscal years, DocuSign’s annual revenue has steadily increased, with a 45.02% increase from 2022 to 2021, a 49.19% increase from 2021 to 2020, and a 38.95% increase from 2020 to 2019. However, shares are down almost 70% this year as investors fear the growth story is over with people returning to their offices.
While it is a valid concern, those with a buy-and-hold investing strategy will value this company because of its huge total addressable market (). Per a report from Straits Research, the signature market is projected to grow from $4.4 billion in 2021 to $42 billion by 2030. The recent Owl Lab State of Remote Work report found that 16% of companies worldwide are fully remote, while 63% offer a hybrid or remote-first option. All of this means the work-from-home trend is not going anywhere, and DOCU has what it takes to take advantage.
Undervalued Reddit Stocks: Alibaba (BABA)
Alibaba Group (NYSE:BABA) is one of the most discussed companies on Reddit, and for a good reason. Dubbed the “Amazon of China,” Alibaba has become a titan in the Chinese market, dominating many different sectors, from retail to online payments to streaming video. What makes Alibaba so unique is its innovative use of technology to improve the experience for both businesses and consumers.
Whether you are part of the Alibaba community or simply an observer learning about this tech giant’s rise to power, Alibaba is a company that is well worth analyzing when discussing undervalued Reddit stocks to buy.
The company is blessed with multiple business lines that benefit from secular tailwinds. At the same time, due to its substantial resources, the company is taking a foray into lucrative areas like cloud computing. One of our conglomerate’s units, Alibaba Cloud, launched an initiative called Project AsiaForward. This will provide $1 billion in funding for startups to help grow their businesses and scale operations. It will further entrench the company’s cloud units in a roughly $158 billion market. Alibaba Cloud, known as Aliyun locally, is already a very healthy business, generating $11.76 billion from its global sales in 2022. It is also thriving, turning profitable in the December 2021 quarter.
Some investors might ask why the company is down by double this year despite a great operating model. The reason is due to the general investing atmosphere in China at this time and the U.S.-China trade tensions. Recently, the Biden administration has placed restrictions on semiconductor exports to China. In addition, Alibaba is one of the companies selected by U.S. regulators for an audit recently to ensure it does not violate any accounting laws.
Nio (NYSE:NIO) is a great investment for anyone looking to get in on the ground floor of China’s booming electric vehicle market. This is largely thanks to Nio’s strategic partnership with the Hefei city government in central Anhui province. With a local government endorsement, Nio can navigate China’s notoriously complex regulatory environment more easily, allowing it to focus its efforts on selling and expanding its business.
What’s more, Nio has been thriving on the sales front, racking up impressive growth numbers quarter after quarter. In Q3, despite a very difficult sales environment, Nio delivered a very healthy 31,607 vehicles, up 29.3% year-over-year. Unlike many other companies still in the development stage, Nio is already a proven performer in the EV space.
Overall, Nio represents an exciting opportunity for investors who want to capitalize on China’s rapidly growing EV industry. With so much momentum behind it and the backing of a powerful government partner, Nio is sure to be a winner for years to come.
Undervalued Reddit Stocks: Walmart (WMT)
Walmart (NYSE:WMT) has been a true performer over the past few decades, earning a reputation as a stable and reliable company that consistently delivers solid returns for investors. While Walmart may not offer the enormous growth potential of other companies in various sectors, it can maintain strong margins thanks to its broad base of loyal customers who consistently purchase essential products at this one-stop shop.
Furthermore, with inflation running rampant across the board, Walmart will continue to do well because it sells affordable, everyday items that people need to make ends meet. In fact, Walmart is one company that can benefit from an economic downturn since so many other businesses struggle when consumers have less disposable income and cannot spend on luxuries.
In addition, the retail heavyweight is a Dividend Aristocrat. It is a hard-won title after 25 years of continuous dividend hikes. Considering the solid business model, the stock’s dividend is very secure, making Walmart among the top income plays among undervalued Reddit stocks to buy.
Disney (NYSE:DIS) is one of the most iconic brands in the world, known for its innovative and groundbreaking films and theme parks. With a strong focus on entertainment, Disney has expanded across different business lines to become a truly multifaceted company. From its Disney Studios and Disney Parks to Disney Consumer Products and Disney Interactive, Disney today touches almost every aspect of modern pop culture. Whether producing blockbuster animated films or developing cutting-edge virtual reality technology, Disney continues to set the standard for high-quality entertainment. And with its continued success, Disney shows no signs of slowing down anytime soon.
One of Disney’s most cutting-edge ventures is Disney+, a streaming service that has quickly risen to become the top streaming company in the world. With a massive content library that includes beloved Disney classics and original shows and films, Disney+ attracts millions of users daily. And with its forward-thinking approach to content creation and distribution, Disney+ shows no signs of slowing down anytime soon. Disney’s position as an entertainment juggernaut is unshakeable, making it one of the world’s most successful companies.
Undervalued Reddit Stocks: Netflix (NFLX)
With its acclaimed original content and massive catalog of movies and TV shows, Netflix (NASDAQ:NFLX) has long been a leader in the streaming industry. Despite some hiccups earlier this year, Netflix has reasserted its dominance with a strong third-quarter earnings report showing significant growth in subscribers and revenue. With over two million new subscribers since July, Netflix proved that it is still on track for continued success.
The streaming company introduced an innovative ad-tier option that will be a huge money spinner for Netflix. Even though some users may balk at having to sit through ads while binging on their favorite series, it seems likely that this new format will be a huge hit with advertisers, who will flock to Netflix as yet another platform on which they can reach their target audiences.
So while Netflix may have initially been met with skepticism and doubt when it first disrupted the entertainment industry, it’s clear that this innovative company is here to stay – and poised to make even bigger waves in the coming years.
Gartner (NYSE:IT) is an excellent stock to invest in, thanks to its streamlined asset-light model and proven track record of success. Founded in 1979, Gartner is one of the leading providers of market research and analysis for the technology sector, with expertise spanning a wide range of domains, including enterprise applications, cloud computing, and telecom services.
Gartner’s innovative approach to business has helped it stand out from other companies in its industry. Its flexible and nimble structure allows Gartner to adapt to changing market conditions while delivering high-quality insights quickly. Furthermore, Gartner’s impressive performance over the years gives investors confidence that it will continue to deliver great results in the future.
As the tech sector continues to grow and evolve, Gartner remains at the forefront of providing valuable market intelligence. With its deep knowledge base and extensive research capabilities, Gartner is well-positioned to provide actionable data and insights that help businesses keep pace with emerging trends. Moreover, as more companies recognize Gartner’s vital role in helping them stay ahead of the curve, it seems certain that demand for Gartner’s services will continue to rise. During the last several quarters, Gartner has remained ahead of analyst estimates. Despite a tough operating environment, where most companies want to delay contract renewals, Gartner reported a 17.92% increase in the topline in its latest report.
Overall, Gartner is an excellent choice for anyone looking for a high-potential investment opportunity, which is why it is on this list of undervalued Reddit stocks to buy.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.