The Reddit community WallStreetBets, or WSB, demonstrated its power by facilitating a massive short-squeeze on GameStop (NYSE:) earlier this year. While the limelight has yet to shift from the healthcare industry, and many stocks in that sector are witnessing steady price increases, we think speculative Reddit biotech stocks Ocugen, Inc. (NASDAQ:), Humanigen Inc. (HGEN), and 180 Life Sciences Corp. (ATNF) should be avoided at all costs given questions about their prospects or ability to stay afloat.The Reddit investment community WallStreetBets or WSB has acquired a reputation as a major market mover following the GameStop (GME) short squeeze it drove in January. A unified approach accords Reddit investors the potential to gain significantly by squeezing short sellers out of their positions on fundamentally weak stocks. However, GME’s fundamental weaknesses have caused the short squeeze to be short lived. The stock has declined 2.8% over the past month.
Regarding the healthcare sector, the Health Care Select Sector SPDR ETF’s (XLV) 19.7% returns over the past six months reflect investor optimism about the sector’s growth prospects. However, the big rally by many of the sector’s stocks over the last year has come absent investors’ increased focus on the space. Rather, some fundamentally weak stocks have rallied thanks to WSB’s actions.
So, we think speculative biotech stocks Ocugen, Inc. (OCGN), Humanigen Inc. (HGEN), and 180 Life Sciences Corp. (ATNF) that are favorites of investors on Reddit forums are best avoided now.
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