Memesters and Trumpsters: The IPO Outlook for 2022
We are witnessing an acceleration. Glimpses of it were granted to us in 2021. The memesters at Reddit pushed GameStop (GME) to an 800% return. Facebook (FB) branded itself as Meta and somehow became the metaverse. Trump Media, aka Digital World Acquisition Corp (DWAC), opened at $51 this morning. They were under $10 in October.
The democratizing of financial markets has taken hold and social media is a market-moving force that investors need to pay attention to this year. To put this in historical terms, 2021 was Howard Dean. This year is Barack Obama. The voices of the memesters and Trumpsters raised and lost millions of dollars last year. Look for Q1 to be more of the same.
Reddit Could Be the Next Meme Stock
This is going to spark some interesting debate among the purists. Reddit, the social media home of the memesters who pushed GameStop and AMC to unimaginable levels last year, filed paperwork on December 15th to go public this year. Could those plans be derailed by their own users? If the Reddit Raiders drive up the price, will that bring the SEC down upon them?
Reddit did a funding round last August that pushed their valuation past the $10 billion mark. Their target for the IPO is $15 billion. They’ll probably hit it, but don’t expect to make any money if you buy in. Twitter (TWTR) is down 25% over the past twelve months. Meta Platforms Inc (FB) just barely squeaked out a 25% gain. The memesters won’t make Reddit profitable.
Another target in the $15 billion range is Discord. The online chat service was almost acquired by Microsoft last April and CEO Jason Citron is overdue for an exit. I’m not sure if it’s worth $15 billion though. The Microsoft bid price was $10 billion. I might buy in if the final valuation is under $12 billion. Anything higher is just throwing money away.
Adding Food to My Water Portfolio
I don’t write much about climate change because the data is often unreliable. That said, weather conditions are certainly deteriorating globally, and food and water shortages are a real issue. My portfolio already includes several water stocks, including Roper Technologies (ROP). It’s time to add some food to that mix, starting with plant-based offerings.
Real meat from an American cow is my first preference, but companies like Impossible and Beyond (BYND) have produced some edible offerings. Impossible is on the IPO list for this year, with an overinflated target valuation of $10 billion. Beyond is selling at a discount after taking losses from low demand and supply chain issues. I bought BYND this morning.
My final pick in this category is a company I feel is recession proof and pandemic resistant. Mondelez International (MDLZ) is the company that makes Cadbury chocolate and Oreo cookies, two of my favorite snack foods. It’s not the sexiest pick, but it will earn you a steady 15% to 20% per year. And I’m guessing I just made you hungry. You’re welcome.