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Intel has been creating a lot of retail buzz and stock buying in recent days.
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The chipmaker’s shares have fallen this year, and an ill-timed investment has galvanized Reddit users.
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Four members of Reddit’s WallStreetBets subreddit explain why they’re betting big on Intel.
GameStop. Bed bath and beyond. Information?
The microchip maker isn’t an obvious choice to become the next big meme stock, but it’s generating a lot of buzz on Reddit’s WallStreetBets subreddit.
early Thursday, Intel was in fifth place Swaggy Stocks‘ list of trending stocks on WSB from the past week, and sixth onwards Monkey wisdom‘s list from the past 24 hours.
Private investors have also piled money into the chipmaker. Vanda Research’s retail flow tracker shows it was the fifth most popular stock in the five trading days through August 13, with net buying of $162 million.
Intel was left alone Nvidia ($1.4 billion), AMD ($259 million), Palantir ($189 million), and Tesla ($164 million). It surpassed that of Apple ($155 million) and Microsoft ($147 million).
Vanda analysts noted that total net retail purchases surged this month, “far exceeding even our most optimistic expectations” as investors took advantage of the “biggest dip since April.” Demand has cooled since early August, but purchases remain hovering around a 12-month high of $1.4 billion per day, the analysts said.
Why Intel?
Shares of Intel have fallen about 60% this year to around $20, the lowest level in more than a decade. It’s on August 2nd no less than 30% fueled – the sharpest one-day decline in more than three decades – after Intel’s second-quarter earnings results revealed plans to lay off about 15,000 employees, or 15% of its total workforce, and led to lower revenues than Wall Street expected.
The company’s net assets were valued at $115 billion at the end of June, about $30 billion higher than its current market capitalization.
Meme stock investors are known for finding beaten stocks to buy en masse, but they also love buying funny stories and supporting colorful characters like GameStop guru Keith “Roaring Kitty” Gill.
In the case of Intel, some of the excitement appears to have been fueled by a WSB post from user u/Sad_Nefariousness10. In one after on August 1, the user claimed that they had received an inheritance of $800,000 from their grandmother, that they had invested $700,000 in Intel that day, and that they planned to hold the chip stock for at least ten years.
It appears to have been a grimly timed purchase, as Intel crashed by more than a quarter after the market closed that day. The user posted an update the next day showing that their investment on paper had shrunk by $204,000 to below $500,000, but they still planned to hold the shares for the next ten years. BI could not confirm the veracity of the messages.
The user’s misfortune caused the forum to erupt in laughter, but appears to have prompted others to join in on the joke by investing large sums in Intel stock.
BI spoke to four Reddit users who claimed to have invested in Intel stock in recent posts on WSB. BI has not verified their claims, so they should be treated with skepticism. Here are their comments about Intel, lightly edited for length and clarity:
1. u/Smallmem
‘I invest a lot in Intel mainly because it is a cheap stock that essentially trades at book value, and investing in it is a bet against international trade; if the US decides not to be completely dependent on Taiwanese semiconductorwhich in my opinion needs to happen, Intel shares will rise quickly.
“Intel Grandma’s post was an incredible post because of the incredible timing. You have someone invest $700,000 of their inheritance in stocks, not even options, and at the end of the day the $200,000 plummets; it’s hilarious. And the framing it as his grandmother’s inheritance has proven even funnier.
“WallStreetBets has always been about people stupidly gambling large sums of money on stupid investments, and it’s even funnier when it involves a currently failing company like Intel. I personally posted myself saying I bought Intel because I felt for the kid ; he made a huge play as his first investment and immediately lost a lot of money.
“While most WallStreetBets (myself included) throw money in the trash hoping to score millions and make a funny post on Reddit when we lose, he planned to set up INTC for 10 years and forget about it! It was a terribly unfortunate timing that did that He is still holding INTC though which shows his dedication I wish him the best.”
u/Smallmem told BI that he is 22, studying a master’s degree in computer science, and owns about $20,000 worth of Intel stock. He said Intel is unlikely to rise like other meme stocks because its market value is too high and there are fewer casual investors bored and stuck at home than during the pandemic. But he suggested the buzz around the stock could prompt professional investors to buy in, sending the price higher.
2. u/randomGov
“I can buy a 1) nationally strategically important company, 2) with a huge moat (only a few can spend over $100 billion to compete), 3) for less than its TANGIBLE book value, 4) that has spent more than its current market capitalization of capital investments in factories (good chance of future significant returns), 5) making things (chips) on which the future (AI, EVs and other technology) is built, 6) with a good chance of becoming a technology leader become.
u/randomGOV posted an unconfirmed screenshot of his portfolio showing a $227,000 investment in Intel.
3. u/wig754
“I think it has the potential to become a meme stock, but it’s not there yet. I think it’s oversold and people forget how broad Intel’s market actually is. Intel is the largest chip manufacturer in the US, I don’t see them going down without a fight. Most importantly, I think a new CEO is on the horizon. Intel has a lot of upside potential if they get their act together.
“I’ve been watching Intel since the COVID/AI boom and how Intel basically stagnated. The recent big drop seemed like the time to jump in – I hope the negative attention puts pressure on them to restructure. icing on the cake.”
u/wedge754 told BI that he has invested about $25,000 in Intel.
4. dc_chilling17
“I’m betting big because the prospects for the company are super bright. The market places too much weight on margin pressure, which is a direct result of their capital investments for their foundry operations. When the market realizes that Intel is going to do that, Fedex will be ahead of it TSMC‘s UPS, and that margins are under pressure due to a perfect storm of events versus a flaw in the company itself, will turn things around.
‘They will take Altera public for an amount of more than 30 billion dollars. Mobileye will probably be worth $15 to $20 billion in a year. Leaving that aside, you’re telling me that one of the largest chip companies in the world by revenue, with a monopoly on production compared to the West is worth $30 to $40 billion?
“In the meantime AMDtheir little brother with a fraction of the market share and no fabs is worth $220 billion? It’s just a market disruption. I bought Exxon for $39, Meta for $89, and now Intel for $19. The play is clear. The market will wake up to this.”
dc_chilling17 told BI that he has a $1.1 million position in Intel.
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