The Best Money-Making Strategy in the World? Shorting Penny Stocks That Get Hyped on Reddit

July 7, 8:33 am

Reddit has become one of the key platforms for tracking stock market sentiment. It’s where investors react to breaking news, share opinions, and highlight potential trades. It’s also a place where hype around specific stocks can build fast - especially around low-priced penny stocks.

At AltIndex, we track Reddit activity across thousands of stocks. And while the social media platform can be a valuable tool to spot early trends, the data tells a clear story: when Reddit starts pumping penny stocks, it’s usually a signal to stay far away, or better yet - for more savy investors - to short.

GameStop Was the Exception, Not the Rule

Many investors still remember the wild ride of GameStop (GME) and AMC in 2021. These stocks became overnight sensations, fueled by Reddit threads, viral memes, and a surge of retail enthusiasm. For some, it was a once-in-a-lifetime win. For others, it was the start of a hunt for the next cheap stock that might take off.

That hunt is still alive today - but the results are far less glamorous.

Let’s take a closer look at the 20 most hyped penny stocks on Reddit this year. Out of those, only three - BlackBerry, Microvast, and Lexicon Pharmaceuticals - have posted gains. The other 17 have declined, and several have done so in dramatic fashion.

Ocean Power Technologies (OPTT) surged in January after a wave of Reddit mentions pushed the price to $1.60. It now trades at just $0.50—a 68% drop from its peak and a 50% decline year to date.
Aditxt (ADTX) was heavily discussed in February, with hundreds of mentions daily. The stock briefly doubled in four days, only to crash afterward. It's now down 97.4% for the year.
Wolfspeed (WOLF) experienced two separate waves of hype - one at the end of April and another on May 19. Despite both, the stock is currently down 82% year to date.

Across the top 20 most mentioned penny stocks on Reddit in 2025, 85% have lost value, with the average stock down 37%. Reddit may still generate excitement - but when it comes to penny stocks, the outcomes rarely live up to the hype.

The 20 Most-Hyped Stocks on Reddit in 2025 - And How They Performed

Company		Mentions		Sentiment	Price Chg %
	Wolfspeed WOLF	6,117		Neutral	-82.3%
	Castellum CTM	3,588		Bullish	-44.5%
	BlackBerry BB	3,033		Bullish	15.1%
	Plug Power PLUG	2,985		Bullish	-31%
	Aditxt ADTX	2,735		Bullish	-97.4%
	Richtech Robotics RR	2,695		Bullish	-27.4%
	Rail Vision RVSN	2,512		Bullish	-83.9%
	Lucid Motors LCID	2,208		Bullish	-28.5%
	Microvast MVST	2,101		Bullish	73.9%
	Ocean Power Technologies OPTT	2,019		Bullish	-50%
	AMC AMC	1,825		Bullish	-25.9%
	Nuburu BURU	1,264		Bullish	-46.3%
	HIVE Digital Technologies HIVE	1,248		Bullish	-18.9%
	Nio NIO	1,091		Bullish	-19.5%
	SUNation Energy SUNE	997		Bullish	-99.7%
	Beyond Air XAIR	913		Bullish	-50%
	MicroAlgo MLGO	904		Neutral	-81.9%
	Tilray TLRY	890		Bullish	-59.4%
	Lexicon Pharmaceuticals LXRX	761		Bullish	21.6%
	Microvision MVIS	692		Bullish	-13%

Why the Hype Fails

There are a few reasons why Reddit-hyped penny stocks so often disappoint:

1. Retail-Driven Momentum is Short-Lived
Many of these stocks surge briefly on social media buzz, only to crash once the buying pressure fades. There’s usually no real fundamental support behind the move.

2. These Companies Are Often in Trouble
The majority of these hyped penny stocks aren’t undiscovered gems, but struggling businesses. Many show signs of weak fundamentals, such as declining revenue, mounting losses, or ongoing cash flow problems. These red flags are often visible in earnings reports, SEC filings, or even negative headlines both well before and after the stock gains traction on Reddit.

3. Confirmation Bias and Herd Mentality
On Reddit, bullish posts attract more attention than bearish ones. This creates echo chambers where dissenting voices are drowned out, and objective analysis gets sidelined in favor of hopium.

The Real Opportunity: Shorting the Hype

Chasing the next Reddit-fueled breakout may sound exciting but for smart investors, the real opportunity is often on the other side of the trade.

When 85% of the most-hyped penny stocks are down year to date, the pattern is clear: most of these names aren’t going to the moon - they're heading straight down. And that makes them ideal shorting candidates.

Here’s why:

• High Probability Setups: With such a high failure rate, shorting these stocks presents a statistically favorable setup.
• Inflated Valuations: These stocks often rally without any real news or financial strength behind them, making them easy to spot and target.
• Fast Drops: When the momentum fades, the fall is often sharp. This makes them well-suited for short trades or options strategies like buying puts.

Not All Reddit Mentions Are Useless

Let’s be clear: Reddit isn't the enemy. At AltIndex, we believe Reddit is one of the best platforms for surfacing early signals. News often breaks there before mainstream media picks it up. Retail sentiment can impact short-term price movements. And community discussions can surface compelling bull and bear cases.

But like any data point, Reddit mentions are only useful in context.

If a low-fundamentals penny stock is suddenly getting pumped with no meaningful news or earnings, that’s not a buy signal - it’s a shorting opportunity.

Final Thoughts

The dream of discovering the next GameStop is powerful - but for most penny stocks getting hyped on Reddit, it’s just that: a dream. The reality is clear. These stocks rarely live up to the excitement, and more often than not, they collapse under the weight of inflated expectations.

That’s why the smarter play isn’t chasing the hype - it’s trading against it.

At AltIndex, we help you do exactly that. Our Reddit Toplists show you the most talked-about stocks in real time, while our Reddit Stock Alerts notify you when a stock starts trending - so you can evaluate whether it’s a real opportunity or just another hype cycle. Combined with sentiment tracking and dozens of alternative data signals, our platform gives you the tools to spot patterns, catch momentum early, and know when it’s time to go short.

Sign up to access more insights, set up your portfolio and receive alerts today.

Get More Insights

Sign up and get access to a personalized dashboard, deeper insights, AI stock picks, stock alerts, weekly newsletter and much more.