Subreddit WallStreetBets (WSB) became popular after the GameStop (NYSE:GME) short squeeze earlier this year. However, many Reddit stocks have failed to maintain the short-squeeze-driven price levels they achieved due to their weak fundamentals. Reddit stocks AMC Entertainment (NYSE:AMC), Digital World Acquisition (DWAC), and Progenity (PROG) to us look significantly overvalued at their current price levels and could witness a downtrend. So, these stocks are best avoided now. Let's discuss.Earlier this year, the Reddit community WallStreetBets (WSB) came to the fore due to the GameStop Corporation’s (GME) short squeeze. While several other stocks experienced skyrocketing price rallies driven by excessive retail trading, influenced by discussions on WSB, many of these stocks, because of their weak fundamentals, could not maintain the price levels they achieved.
The popularity of the Reddit forums among meme investors is waning. According to alternative data provider Quiver Quantitative, the average daily comments on WSB in October have fallen by half compared to November 2020.
Hence, we think it could be wise to avoid overvalued Reddit stocks AMC Entertainment Holdings, Inc. (AMC), Digital World Acquisition Corp. (DWAC), and Progenity, Inc. (PROG) in November.