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 (NASDAQ:TLRY), Clover Health (CLOV), and Ocugen (NASDAQ: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. (NYSE: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.