- Intel has been driving lots of retail chatter and stock purchases in recent days.
- The chipmaker's stock has tanked this year, and a poorly timed investment has tickled Reddit users.
- Four members of Reddit's WallStreetBets subreddit explain why they're betting big on Intel.
GameStop. Bed Bath & Beyond. Intel?
The microchip maker isn't an obvious choice to become the next big meme stock, but it's generating a bunch of buzz on Reddit's WallStreetBets subreddit.
Early on Thursday, Intel ranked fifth on Swaggy Stocks' list of trending stocks on WSB over the past week, and sixth on Ape Wisdom's list for the past 24 hours.
Retail investors have also been piling 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, attracting $162 million in net retail purchases.
Intel only trailed Nvidia ($1.4 billion), AMD ($259 million), Palantir ($189 million), and Tesla ($164 million). It outpaced the likes of Apple ($155 million) and Microsoft ($147 million).
Vanda analysts noted that overall net retail purchases have surged this month, "far exceeding even our most bullish expectations" as investors capitalized on the "chunkiest dip since April." Demand has cooled since the start of August but purchases continue to hover near a 12-month high of $1.4 billion a day, the analysts added.
Why Intel?
Intel stock has plunged by about 60% this year to about $20, its lowest level in over a decade. On August 2, it tanked as much as 30% — its steepest one-day decline in over 30 years — after Intel's second-quarter earnings revealed plans to lay off some 15,000 staff, or 15% of its total workforce, and guided toward 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-down stocks to purchase en masse, but they also love to buy into funny stories and back colorful characters like GameStop guru Keith "Roaring Kitty" Gill.
In Intel's case, some of the excitement seems to have been sparked by a WSB post from the user u/Sad_Nefariousness10. In a post on August 1, the user claimed they'd received an $800,000 inheritance from their grandmother, had invested $700,000 of it in Intel that day, and planned to hold the chip stock for at least 10 years.
It appears to have been a dismally timed purchase, given Intel crashed by over a quarter after the market closed that day. The user posted an update the next day showing their investment had shrunk by $204,000 on paper to below $500,000, but they still planned to hold the stock for the next decade. BI was unable to confirm the posts' veracity.
The user's ill fortune sent the forum into fits of laughter, but appears to have spurred others to get in on the joke by investing large sums in Intel stock.
BI spoke to four Reddit users who've claimed in recent posts on WSB to have invested in Intel stock. BI has not verified their claims so they should be treated with skepticism. Here are their comments on Intel, lightly edited for length and clarity:
1. u/Smallmem
"I'm investing big into Intel primarily because it's a cheap stock basically trading at book value, and investing into it is a bet against international trade; if the US decides to not be completely reliant on Taiwan Semiconductor, which I believe it must, Intel stock will rise quickly.
"The Intel Grandma post was an incredible post because of the incredible timing. You have someone invest $700k of their inheritance into stocks, not even options, and it plummets down $200k by the end of the day; it's hilarious. And the framing of it being his grandma's inheritance has proven even funnier.
"WallStreetBets has always been about people gambling stupid large sums of money into dumb investments, and it's even funnier when it's in a currently failing company like Intel. I personally posted myself buying Intel because I felt for the kid; he made a gigantic play as his first investment and lost a bunch of money immediately.
"While most of WallStreetBets (including me) throw money in the trash playing options hoping to score millions and make a funny post on Reddit when we lose, he was planning to set and forget INTC for 10 years! It was terribly unfortunate timing that did him in. He's still holding INTC though, which shows his commitment! I wish him the best."
u/Smallmem told BI he's 22, studying for a master's in computer science, and owns around $20,000 of Intel stock. He said Intel is unlikely to take off like other meme stocks as its market value is too high, and there are fewer casual investors who are bored and stuck at home than during the pandemic. But he suggested the buzz around the stock could lead professional investors to buy in, pushing up its price.
2. u/randomGov
"I can buy a 1) nationally strategically important company, 2) with a huge moat (only a few can spend 100+ billion to compete), 3) for less than its TANGIBLE book value, 4) that has spent more than its current market cap on capex into fabs (good chance of future significant returns), 5) making stuff (chips) the future (AI, EVs, and other tech) is built on, 6) with a good chance of being a tech leader."
u/randomGOV posted an unconfirmed screenshot of his portfolio showing a $227,000 investment in Intel.
3. u/wedge754
"I think it has the potential to become a meme stock, it's not there yet. I think it's oversold and people are forgetting how broad Intel's market actually is. Intel is the US largest chip manufacturer, I don't see them going down without a fight. Most importantly, I'm thinking a new CEO is on the horizon. Intel has a ton of upside potential if they can just 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'm hoping the negative attention puts pressure on them to restructure. The meme posts are just icing on the cake."
u/wedge754 told BI he's invested about $25,000 into Intel.
4. dc_chilling17
"I'm betting big because the outlook for the company is super bright. The market is putting too much weight on margin pressure, which is a direct result of their capex buildout for their foundry business. When the market realizes that Intel is going to be the Fedex to TSMC's UPS, and that the margins are being squeezed due to a perfect storm of events vs a flaw in the business itself, things will turn around.
"They will IPO Altera for north of $30 billion. Mobileye is probably worth $15-20 billion a year from now. Back those out, you're telling me that one of the largest chip companies in the world by revenue, with a monopoly on manufacturing with respect to the West, is worth $30-40 billion?
"Meanwhile AMD, their little brother with a fraction of the market share and no fabs is worth $220 billion? It's just a market dislocation. I bought Exxon at $39, Meta at $89, and now Intel at $19. The play is obvious. The market will wake up to it."
dc_chilling17 told BI he has a $1.1 million position in Intel.