The recent meme stock craze has captivated the attention of investors and the media alike. While some meme stocks may lack solid fundamentals, there are a few diamonds in the rough that hold long-term potential.
Today, we highlight three such stocks: Palantir Technologies (PLTR), MongoDB (MDB), and SoFi Technologies (SOFI). These companies have managed to ride the wave of meme-driven hype and are now positioned for sustainable growth and profitability.
Palantir Technologies
Leveraging AI for Success Palantir Technologies initially gained popularity among meme investors due to its cutting-edge big data capabilities. The company’s potential to address various tasks, such as security breaches and COVID-19 tracking, sparked interest. Following the market downturn in 2022, Palantir’s stock price languished in the single digits. However, the recent surge in artificial intelligence (AI) hype has reignited investor enthusiasm.
Palantir’s AI capabilities, coupled with the release of its new AI platform called AIP, have propelled the stock’s price up by approximately 150% from its December low. In addition, Palantir has made significant strides in improving its financials. The company reported an 18% revenue increase in Q1 2023, reaching $525 million. Moreover, Palantir achieved profitability, recording a GAAP net income of $17 million in the same quarter. With a price-to-sales (P/S) ratio of 16, Palantir’s value proposition and AI-driven approach suggest long-term gains.
MongoDB
Transforming Databases for the Data-Driven Era MongoDB is another meme stock that holds substantial promise. Traditional relational databases struggle to handle the vast amount and variety of data generated today, including videos, text messages, and stock tickers. MongoDB’s cloud-based Atlas database addresses this challenge, providing efficient support for processing diverse data types.
The company boasts an impressive customer base of over 43,000 as of the end of the first fiscal quarter of 2024. This represents a 16% increase from the previous year, with nearly 1,800 customers spending more than $100,000 annually on the platform, a growth of 28%. MongoDB’s revenue for Q1 2024 reached $368 million, a 29% year-over-year increase. While the stock’s recent climb of nearly 28% following the revenue announcement places it at a P/S ratio of 20, the need for MongoDB’s innovative Atlas database and its sustained growth potential make it an attractive investment for companies seeking to update their databases.
SoFi Technologies
From Meme Stock to Fintech Powerhouse At first glance, SoFi Technologies might seem an unlikely candidate for a solid long-term investment. The company’s origin as a result of a special purpose acquisition company (SPAC) purchase and a dip in stock price due to the student loan moratorium may raise eyebrows. However, SoFi has undergone significant transformation and emerged as a formidable player in the fintech sector.
With the acquisition of a bank charter and fintech platforms like Galileo and Technisys, SoFi has positioned itself as the “AWS of fintech.” Additionally, the recent resolution to the student loan moratorium, as part of an agreement between congressional Republicans and President Joe Biden, has revived a crucial revenue stream for the company. In Q1 2023, SoFi’s revenue surged 43% to $472 million, driven by an increase in financial services products.
Despite the recent stock surge, SoFi’s P/S ratio stands at a modest 4, indicating significant room for further growth. With its expanding customer base and narrowing losses, SoFi Technologies appears to be a promising investment opportunity.
While the meme stock craze has often been associated with speculative investments, some stocks offer genuine long-term potential. Palantir Technologies, MongoDB, and SoFi Technologies have solid foundations, driven by innovative technologies, expanding customer bases, and improved financial performance. As these companies continue to deliver value and address evolving market needs, investors may find these meme stocks to be more than just a passing trend.
