Stocks trending on the social media platform Reddit are often observed for finding some interesting investment ideas. A survey by Brunswick, conducted earlier this year, revealed that 58% of the institutional investors who use Reddit have made investment decisions based on insights on the platform. Further, 46% of the respondents expect to use the platform more in the next year. While several Reddit stocks have often been high-risk, high-reward ideas, some are backed by solid fundamentals and analysis. We used TipRanks’ Stock Comparison Tool to place Rivian (NASDAQ:RIVN), C3.ai (NYSE:AI), and Visa (NYSE:V) against each other to pick the Reddit stock that could offer the best upside.
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Rivian (NASDAQ:RIVN)
Shares of Rivian have been on fire since the electric vehicle (EV) maker announced upbeat Q2 delivery numbers. Rivian delivered 12,640 vehicles in Q2 2023, marking a 59% rise compared to Q1 2023 and 183% year-over-year jump. Total production increased by 49% from Q1 to 13,992 EVs. Moreover, the company reaffirmed its annual production guidance of 50,000 EVs.
After the update, several analysts raised their price target for Rivian, as the solid Q2 deliveries report addressed some concerns about production and supply chain issues. Also, investors and the Street have cheered Amazon’s (NASDAQ:AMZN) announcement that it was taking delivery of 300 of Rivian’s electric delivery vans (EDVs) in Europe. The order is part of an agreement between Amazon and Rivian to produce 100,000 EDVs.
Last week, Needham analyst Chris Pierce increased his price target for RIVN to $28 from $26 to reflect better-than-expected production and deliveries. He reiterated a Buy rating on RIVN and added the stock to his conviction list. With production bottleneck concerns in the rearview mirror, Pierce feels that investor sentiment should reflect higher confidence in Rivian’s R2 SUV, given a significantly larger total addressable market.
On Monday, Barclays analyst Dan Levy increased his price target for Rivian to $30 from $22 and reiterated a Buy rating. Levy expects Rivian to beat second-quarter estimates, saying, “stronger-than-expected 2Q deliveries stand to add fixed cost absorption benefits to the gross margin result, alongside continued operational self-help.”
Further, Levy anticipates the rally in RIVN shares to continue, as investors are “increasingly comfortable with RIVN’s path to breakeven earnings.
Is RIVN a Buy or Sell?
Wall Street is cautiously optimistic on Rivian, with a Moderate Buy consensus rating based on 10 Buys, five Holds, and one Sell. The average price target of $23.50 implies about 8% possible downside. Shares have advanced 38% so far in 2023.
C3.ai (NYSE:AI)
Shares of enterprise artificial intelligence (AI) application software company C3.ai have skyrocketed 265% year-to-date, thanks to the spike in generative AI interest following the rapid adoption of OpenAI’s ChatGPT. At the investor day held on June 22, the company said that its qualified pipeline doubled from 297 opportunities to 614 opportunities due to increased interest in enterprise AI.
However, management’s commentary at the investor day failed to impress investors. There are concerns about the company’s pipeline of deals, especially on whether these pilot projects with deliver material revenues.
Following the investor day event, Deutsche Bank analyst Brad Zelnick, who has a Sell rating on C3.ai stock, noted that the event “left a lot to be desired,” given that no details on financials were provided and the company gave limited updates about its operations. Zelnick added that the event failed to address his skepticism about the differentiation of the C3.ai platform and its ability to meet its “constantly evolving” financial goals.
In reaction to the investor day event, DA Davidson analyst Gil Luria maintained a Hold rating on AI stock and a price target of $30. Luria thinks that while the incremental data points and the product insights were helpful, the tailwinds from generative AI already seem to be priced into the stock.
Is C3.ai a Good Stock to Buy?
Wall Street is sidelined on C3.ai stock, with a Hold consensus rating based on two Buys, six Holds, and three Sells. The average price target of $27.40 implies a possible downside of about 33%.
Visa (NYSE:V)
Payments giant Visa has an extensive presence in more than 200 countries, with over 4.2 billion cards in circulation. Despite tough macro conditions, the company delivered market-beating results in the fiscal second quarter (ended March 31, 2023), with adjusted EPS rising 17% to $2.09 on revenue growth of 11%.
The company processed 50.1 billion transactions in the March quarter, marking a year-over-year increase of 12%. Visa’s performance in the quarter was driven by strong travel demand.
To further strengthen its platform, the company recently announced the acquisition of Brazilian payment and banking platform Pismo for $1 billion. The acquisition will help Visa to provide core banking and issuer processing capabilities across debit, prepaid, credit, and commercial cards for financial institutional and fintech clients through cloud-native APIs.
The acquisition of cloud-based Pismo will also allow Visa to offer connectivity for emerging payment rails, like Pix (Central Bank of Brazil’s instant payment platform) for financial institution clients.
Ahead of Visa’s fiscal third-quarter results later this month, MoffettNathanson analyst Lisa Ellis boosted the price target for Visa to $320 from $290 and reiterated a Buy rating on the stock on Friday. The analyst also raised the price target for Visa’s closest rival Mastercard (NYSE:MA) to $490 from $460 and maintained a Buy rating.
Ellis believes that both these stocks offer investors “an unusually attractive entry point.” She noted that business momentum is strong and both the payment giants have delivered nine straight quarters of revenue and EPS beats. Ellis also feels that Visa and Mastercard are not facing “any new or unusual risks or threats of disruption” that would impact their valuation.
What is the Target Price for Visa Stock?
Visa earns a Strong Buy consensus rating based on 19 Buys and one Hold. The average price target of $272.55 implies over 15% upside. Visa shares have risen nearly 15% year-to-date.
Conclusion
While Rivian, C3.Ai, and Visa are buzzing on the Reddit platform, Wall Street is highly optimistic about Visa. The ongoing macro pressures might impact Visa’s performance over the near term. Nonetheless, the company’s long-term growth potential seems attractive due to its extensive network and the continued shift to digital payments.
