Do you trust the collective wisdom of crowds? Granted, hordes of people gathered together can sometimes behave in ways that lead to disastrous results. However, when given a specific mission to complete, crowds oftentimes get it right.
With that as the backdrop, investors who regularly turn to the online discussion platform Reddit as a source for stock ideas are suddenly buying a whole lot more of these three companies. Should you join the crowd and consider these three stocks that Reddit users can't get enough of?
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1. Bumble
If you're not familiar with it, Bumble (BMBL -0.57%) operates multiple online dating apps. Nearly 3 million paying customers were looking for love using its services as of the end of 2021, up more than 10% from a year earlier. That headcount growth drove the company's top line from $542 million in the fourth quarter of 2020 to nearly $766 million in the last quarter of last year -- a 41% improvement. That still fell short of analysts' estimates, though, and on the bottom line, the company remains in the red. Nevertheless, shares soared by 44% on Wednesday following the release of its fourth-quarter results.
What gives?
Bumble's guidance is the key. Management believes sales for 2022 will rise by around 35% to land somewhere between $934 million and $944 million, despite its decision to suspend operations in Russia, Ukraine, and Belarus. That's a bit better than analysts' consensus outlook, particularly among investors quietly worried that the conflict in Eastern Europe could end up taking a bigger toll than expected.
The sheer scope of Wednesday's stock price surge is a problem. While impressive, it also leaves little room for further near-term gains. Instead, it invites profit-taking. Investors interested in stepping in may want to be patient with any entry, even though the consensus price target of $37.57 a share is still well above the stock's present price near $24.
2. ZIM Integrated Shipping Services
Don't beat yourself up if you've never heard of ZIM Integrated Shipping Services (ZIM 16.07%) -- most people haven't. Aside from the fact that it's an Israel-based outfit with a market cap of less than $10 billion, ZIM is in the maritime freight business ... not exactly a high-profile industry in normal times, but one that's getting a lot of attention right now because of ongoing supply chain issues.
Zim has turned at least a few heads among investors of late, however, because its stock price has rallied by more than 26% since the end of 2021 while most other growth stocks have been losing ground.
A good-sized chunk of that gain took shape on Wednesday following the release of the shipper's fourth-quarter results. ZIM posted record-breaking revenue of $3.5 billion for the quarter, capping off full-year revenue of $10.7 billion. Operating income for the quarter rolled in at $2.12 billion -- more than a third of 2021's $5.8 billion total. It was, for all intents and purposes, an incredible year, and the market has rewarded Zim with a 400% stock price run-up since its shares began trading on the New York Stock Exchange a little over a year ago.
Yet despite that, the shares remain surprisingly affordable relative to revenue and earnings.
Perhaps the thing that's drawing the interest of so many Reddit users, however, is the dividend.
It's sorta complicated, so here's the simple explanation: ZIM pays a regular quarterly dividend of $2.50 per share, but in light of a banner 2021 the company has also declared a one-time special dividend of $17 per share, payable later this month. It remains to be seen how big these future one-off payments will be, or if they're paid at all. In light of the fact that this shipper earned a little over $39 per share in 2021 though, even a weaker year leaves the door open to strong dividends above and beyond the $2.50 per-share quarterly payout cadence ZIM seems to be establishing. Even if it's the only dividends the company ever pays again, the regular annualized dividend yield stands at a healthy 13% of the stock's current price.
3. WeWork
Finally, office space landlord WeWork (WE) is once again causing a stir among speculative investors.
Yes, this is the same WeWork that planned to go public back in 2019, but ultimately canceled its IPO after a detailed look at its books and corporate structure raised more questions than it answered. The real estate company was finally able to reach the public markets in October via a SPAC (special purpose acquisitions company) merger, though the stock has underperformed since then. All told, WeWork share prices are down by 65% from their post-SPAC-merger peak, and they plunged to a fresh low on March 4.
It's curious, however. While that day's 22% tumble was horrendous, investors are clearly viewing it as a capitulation. The stock is up by 8% since then, and it's moving higher on above-average volume.
The likely reason? While it's still far from being a "safe" play for most portfolios, the looming end of pandemic restrictions in the U.S. sets the stage for en masse returns to offices -- and a rising interest in co-working and meeting spaces like those WeWork provides. If nothing else, it's a narrative worth keeping an eye on.
