Whatâs Going On Here?So-called âmeme stocksâ have been front and center of investorsâ minds this month, and it pays more and more to know which stocks are going to the â well, you know. What Does This Mean?The meme stock craze that first kicked off in January is back again: GameStop and AMC Entertainment â two of the highest-profile winners the first time around â have now seen their stocks rise 1,500% and 2,227% respectively this year. And theyâre not the only ones to have benefited from an influx of Reddit-inspired retail investors: an unprofitable Korean power plant manufacturer, a US medical insurance firm, a private prison operator, and a wrestling entertainment powerhouse have all seen their share prices make big strides. Why Should I Care?For markets: Meme stocks arenât just fun and games.
GameStop might not have expected this opportunity to land on its lap, but itâs serious about taking full advantage now that it has: the retailerâs been using its cult following to raise cash this year, and itâs just announced a new CEO and CFO, both from Amazon. The hope is that a rejuvenated bank balance and savvy ecommerce execs at the helm will improve the fundamentals of its business, turning it from âjustâ a meme stock into a real heavy-hitter.
The bigger picture: Meme stocks might be running out of gas.
Meme stock hunters particularly like stocks that other investors are âshortingâ â i.e. betting will fall in value. After all, those investors are likely to reverse their bets if the stock starts to rise, which just adds more fuel to the rally. But major short sellers have wised up since January, and theyâre no longer so open about which positions theyâre taking. Thatâs making it harder for meme stock hunters to find opportunities, and might kill off the meme theme as soon as it began. | 