Bed Bath & Beyond and AMC Entertainment Holdings, for instance, have experienced significant volatility of late, surging in value only to end up crashing. Meme stocks are a bit of a roller coaster for investors, and they can lead to extreme profits or extreme losses, depending on when you happen to buy. Novavax is expected to make $4.66 a share in 2022, reversing a loss in 2021.
What to know about the dangers of meme stocks
The company builds enterprise big data and AI software that helps organizations update their operations for a digital era. Palantir has concentrated exposure working for government entities, but it’s quickly working to expand further into the private sector. While an ETF such as MEME may be less risky than holding one singular stock, it’s still made up of high-risk investments that could just as easily plummet as skyrocket. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only.
- Conversations on Reddit about highly manipulated stocks tend to evaporate quickly and seldom repeat, but several meme stocks have loyal, fervent fanbases.
- A member of the hot 2020 IPO stock class, Palantir quickly gained a large investor following after making its public debut.
- The Commodities Futures Trading Commission is conducting a similar investigation regarding the prices of silver futures.
- And if the stock price rises to $500, you’ll owe that difference.
This is what we can expect to see from meme stocks in 2024
These stocks can provide generous returns even for amateur investors, as many are selling below $50. The new movie “Dumb Money” is about the GameStop craze in 2021 when amateur traders banded together on the social media site Reddit to give professional investors a run for their money. In 2021, retail investors bet big on so-called “meme stocks,” with the goal of making money and upending power dynamics on Wall Street. Just as important as finding the next hot meme stock is avoiding common trading mistakes. Ultimately, a short seller may run out of available funds to hold on to the short and will be forced to buy back the shares at a higher price and close out the position.
Top Meme Stocks of 2021: GameStop (GME)
Its (free cash flow was negative $1.8 billion in Q1 of 2023. Rivian needs to get itself to breakeven before its cash and short-term investment balance ($11.2 billion at the end of March 2023) dries up. On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. I believe that the meme stock rallies we’ve seen play out in recent years aren’t likely to become commonplace.
For example, in early December 2021, its price in the stock exchanges rose 10% over the news that it had a new significant investor. And as the pandemic remains in the public consciousness, rapid testing will remain a viable option, particularly as a significant segment of the population remains unvaccinated. However, it’s fair to question how much revenue the company can generate from this model. The company was continuing to lose money so it’s certainly not enough to be profitable. The only words I can offer to those looking to invest in ContextLogic is let the buyer beware. I can’t say the company isn’t trying to improve its financial situation.
That’s fantastic news for AMC, which hasn’t yet surpassed 2019 levels of revenue in any quarter since the outbreak, despite being on the mend. Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. Chris Markoch is a freelance financial copywriter who has been covering the market for seven years.
As the number of installed charging stations swells, the company’s recurring revenue is likely to remain robust. The FDA approved Tpoxx to treat smallpox back in 2018, and so far the main reason for countries to buy it has been to have it on hand in the case of bioterrorism involving that disease. But the treatment is effective against monkeypox as well, and cases have been rising, accelerating demand for Tpoxx. Retail investors have been buying up the stock, hoping to cash in on stronger sales numbers.
A high short interest can potentially lead to a short squeeze down the road, especially if the business does well and proves the naysayers wrong. However, as a shareholder of Intercept I can also attest that there are justifiable reasons for people to be pessimistic. Food and Drug Administration (FDA) sent the company a Complete Response Letter for obeticholic acid (OCA) as a treatment for nonalcoholic steatohepatitis (NASH).
If many shorts are forced to cover at once, it adds additional upward pressure on the stock’s price as they are all forced to buy the stock and cover at ever higher prices. This is known as a short squeeze, and it accelerates a stock’s price increases as more and more short sellers are forced to bail out to cut their losses. One of the features of meme stocks, especially early on, has been that they tend to be heavily shorted names.
Needless to say, the stock price wasn’t sustainable, but GME stock is still up over 600% in 2021. It’s unrealistic to expect that the company will deliver that kind of performance in 2022. The company’s Binance cryptocurrency exchange ability to pivot from a brick-and-mortar to a digital model has yet to be determined. But at this point, loyal GameStop investors believe in the stock, and that may be enough to push the stock higher.
Named after the virality of internet memes found on social media, these stocks saw online communities form around them to boost and hype their prospects, even though meme company fundamentals remained questionable. https://broker-review.org/velocity-trade/ Meme stocks are typically companies that have generated a solid following on certain social media platforms. Via memes, retail investors commiserate over why particular companies are worth buying.
“They are shrinking, period, and they can’t save their way to prosperity,” he added. In 2022, Bed Bath & Beyond announced intentions to sell 12 million shares in a secondary offering as meme stock promoters pumped the value of its stock. However, the stock fell steeply following the company’s announcement of the plan. A meme is an idea or some element of popular culture that spreads and multiplies across people’s minds. Memes gained increasing prevalence and relevance as the internet and social media grew.
If you’re excited about investing in meme stocks, but don’t love the risk of holding a singular stock, the Roundhill exchange-traded fund MEME offers investors exposure to 25 meme stocks in one ETF. The SoFi Social 50 ETF (SFYF) and VanEck Social Sentiment ETF (BUZZ) are similar — they track stocks with positive sentiment among traders and social media users, and thus have substantial exposure to meme stocks. That’s why it’s part of this meme stock list, because retail investors have figured out a formula and they’re making it work. The company’s revenue and earnings are still down from pre-pandemic levels and yet the stock price is above pre-pandemic levels.
But since becoming a public company, the fintech stock favorite has gotten aggressive, expanding its reach and has added a few million new customers in recent years. As with other fast-moving businesses, SoFi’s biggest hurdle now is how quickly it can focus on breakeven. By contrast, a legitimate meme stock movement is typically accompanied by a slow rise in posts and interest that catches fire and takes off, like with GameStop in late January. The first telltale sign of meme stock manipulation are sudden spikes in posts about a stock that disappear as quickly as they come, Rehl said.
To boot, it’s had a more stringent black-box warning added to Ocaliva, an approved treatment for primary biliary cholangitis. It’s also possible that small-cap biotech stock Intercept Pharmaceuticals (ICPT) becomes the next Reddit meme stock. Equally worrisome, the company’s current liabilities ($279.2 million) are well over double its current assets ($111.4 million). This suggests Dave & Buster’s doesn’t have the capital necessary to meet its expense obligations over the next 12 months. An improving economy could help these figures immensely, but its future remains dicey, at best. Analysts think Bed Bath & Beyond, AMC Entertainment and GameStop are now 82%, 80% and 60% past their 12-month price targets.
No discussion of meme stocks would be complete without OG AMC Entertainment Holdings Inc. (AMC). But while the movie theater chain and original meme stock darling still grabs plenty of attention, it no longer fits the bill of a meme stock, according to Alicia Reese, VP of equity research at Wedbush. “AMC has seemingly lost its meme status, its share price having come crashing back down to earth over the past several months, particularly since its APE fold-in and reverse stock split,” she said. “AMC is now trading at a more normalized valuation, even if still at the high-end of its pre-meme historic range.” Meme stocks lure investors with the promise of potentially big returns in little time.
Yet what really stands out is its muted average daily volume of 1.36 million shares. It would take almost six full days for short-sellers to cover their positions, based on this three-month volume data. Similar to Blink, there are two reasons it’d make a perfect meme stock.
During its Q1 earnings announcement in May, Nvidia projected that sales would increase by 24% on a year-over-year basis at the midpoint of the forecast. Nevertheless, both the top and bottom lines for Tesla exceeded Wall Street expectations. Non-GAAP earnings rocketed by 57% to $2.27 per diluted share while revenue increased by 42% to $16.9 billion. And Tesla accounts for at least a 65% market share in the United States alone. Tesla is also investing in other high-growth industries like solar energy, so it has its hands on quite a few types of transformative tech.
Hedge funds are types of investments that pool money together from wealthy investors, and short selling is when you borrow shares from a broker and immediately sell them with the hope that the stock price will fall. If it does, you can repurchase the shares at the lower price, return them to the brokerage and keep the difference as profit. Without their cult followings, meme stocks are not necessarily valuable assets. These online communities, such as the popular Reddit forum WallStreetBets, coordinate buying and selling efforts to influence stock prices. With enough online support, meme stocks can maintain elevated stock prices regardless of the underlying company’s worth. These so-called meme stocks are a great example of how regular investors can make or break a company, at least in the trading markets.
But keeping with the theme of meme stocks, Dave & Buster’s still isn’t out of the woods on an operating basis. Selling stock and taking on debt absolutely helped the company make it through the worst part of the pandemic. Then again, interest expenses totaled 5.6% of net sales in the first quarter, up from just 1.1% of total sales in the first quarter of 2019. “However, we would note that there have been fewer instances of these types of meme stocks occurring this year, and their lifespan tended to be pretty short,” he added. Stocktwits, a social platform for investors and traders, told MarketWatch that it has seen a dedicated core audience of retail investors stick with the likes of AMC and GameStop.
And don’t fool yourself into thinking there’s a fundamental story for any of these stocks. “Meme stocks” are back — have you seen shares of Bed Bath & Beyond (BBBY)? But chasing best-known favorites may not be the best way to score, analysts say. “AMC shed all the rest of its meme-era shareholders and are now left with the lifers, along with some institutional shareholders now that valuation has come back to a more normalized range.” AMC’s shares ended Friday’s session at $6.65, a far cry from their high of $393.63 on June 2, 2021, during the meme-stock frenzy.
In addition, big investors, such as Scion Asset Management’s Michael Burry and Chewy co-founder Ryan Cohen, also took long positions. GameStop, among the first meme stocks, is a prime example of how the retail investor community identified a highly shorted stock and used a short squeeze to work in their favor. If you’re not interested in building and managing your own portfolio of meme stocks but still want some exposure to the movement, there are some ETF solutions to help. One example is the VanEck Social Sentiment ETF (BUZZ 1.77%), an actively managed portfolio of 75 stocks that rank high in social media conversations. Top holdings in the portfolio include GameStop, AMC, and Palantir. This ETF has an annual expense ratio of 0.75% (meaning it costs $75 per year for every $1,000 invested).
Good research can help investors find the best companies to invest in. This Canadian company is known for pioneering the smartphone, but it quickly went by the wayside when Apple revolutionized the space. These days, Blackberry is a software firm providing endpoint security software and other Internet of Things management products for customers such as the auto industry. Rivian is currently in the midst of “production hell,” a phrase coined by Tesla CEO Elon Musk when his company was trying to ramp up factory production to stem cash losses. Rivian has had hiccups getting its R1T electric truck out the door, but it’s making progress. Impact on your credit may vary, as credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.
Video game retailer GameStop is recognized as the first meme stock. Now in year three of the movement, new meme stocks are being created all the time as individual investors look for new ways to beat the stock market. Here are five to do some more digging on (beyond arguably the two most famous meme stocks — video game retailer GameStop (GME 6.16%) and the world’s largest movie theater chain AMC (AMC 3.96%). That said, it’s clear that certain stocks have gained a cult-like following on social media channels. The trading volume of these stocks has been huge, largely due to retail investors who are looking for quick wins.
Retail investors are always searching for stocks to send “to the moon.” Below are some of the hottest names that social media users are buzzing about during the week of November 8. The board also gave Chairman and Chief Executive Ryan Cohen the authority to manage the investment portfolio. The new policy was dubbed “alarming” and “inane” by Wedbush Managing Director Michael Pachter. Short selling is when somebody sells shares that they do not own, hoping to buy them back at a lower price. That seller must borrow shares from somebody who is long the stock in order to sell them.
The analyst thinks that in 2024, AMC will continue to issue pre-authorized shares to pay down its high-debt balance, as evidenced by the $350 million equity offering completed this week. “The company is focused on right-sizing the balance sheet, while attempting to maintain strong relations with the AMC lifers still propping up the stock,” said Reese. SoFi’s financial services — all unified together via a singular app — got its start in the student loan niche of the industry.
This company’s status as a 5G provider does give investors reason to be upbeat about its growth outlook. However, it was Nokia’s following on forums such as Reddit’s WallStreetBets which really galvanized many investors to pile into this name. The sorts of short squeezes and parabolic moves that have proliferated https://forex-review.net/ really defied the rules of theoretical finance. Seeing some of these rallies play out, by the shares of companies with dubious fundamentals, has been remarkable. Nunes called on the congressional leaders to launch an investigation into what he said is the “unlawful manipulation” of DJT stock.
Bear in mind that meme stocks can be especially volatile, so plan accordingly and be prepared to continue investing more over time. Part of the motivation behind the online support for certain meme stocks comes from hedge funds’ short positions in those companies. The surge of its stock wasn’t caused by any real changes in its underlying business. Rather, speculation and a stampede by retail investors resulted in a tremendous rally by GME stock which was unexpected by most. Meme stocks are a type of investment that has built a cult following online, particularly on social media platforms, like Twitter, and forums, such as Reddit.
And that’s why analysts seem to think these meme stocks are played out. “Meme stock” ETFs, which own shares of stocks online traders like to trade en masse, are soaring in value. Since the start of July, the $1.6 million-in-assets Roundhill Meme ETF (MEME) is up nearly 30%.
It has been incredibly volatile of late and may remain so over the weeks and months ahead, and here’s why. One reason retail investors are bound to like Intercept is its volatility. Intercept’s beta is north of 1.5, which means that, on average, it moves more than 50% more than the broader market. For example, if the benchmark S&P 500 rises 1%, we would expect to see Intercept up more than 1.5%. However, Blink certainly fits the definition of “meme stock” if you get a closer look at its operating performance.
And if the stock price rises to $500, you’ll owe that difference. Conversations on Reddit about highly manipulated stocks tend to evaporate quickly and seldom repeat, but several meme stocks have loyal, fervent fanbases. But lesser-known investing subreddits can be plagued by manipulators like spammers and bots. The former are “bagholders” who made an ill-timed purchase and repeatedly post about a stock to boost its price so they can sell it higher, Rehl said.
The meme stock movement unofficially started in the summer of 2020, when most people were stuck at home during the first few months of the pandemic. Looking to turn some of that extra free time into money, many people turned to the stock market and social media for ideas. This stock gained a massive following after Reddit short-sellers and retail investors went in for a short squeeze at the beginning of January 2021.
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