News of Roaring Kitty returning to the scene has driven some meme stocks to unbelievable gains over the past few days. For the uninitiated, Roaring Kitty is the leader of the meme stock movement, famed for his short squeeze campaign on GameStop that forced hedge funds like Melvin Capital to capitulate. He is a cult hero, and with the king’s return, the army of meme investors has become hopeful.
GameStop (GME) has surged 205% this week so far.
Another related meme stock, AMC, also saw an increase of 117% this week.
There may be more upward potential, but it’s not for the faint-hearted. Meme stocks are as exhilarating as a casino.
I was searching for a MEME Stock ETF as it seemed the easiest way to speculate on the craze without having to track the individual meme stocks. There was indeed a Roundhill MEME ETF (MEME), but unfortunately, the ETF was closed in December 2023 due to underwhelming demand. The craze started five months too late.
However, this also serves as a warning sign because meme stocks lack longevity. They experience unbelievable short-term run-ups and spectacular crashes, making them very speculative in nature and unsuitable for long-term holding.
Since the ETF is no longer available, I have broadened my search to include other meme-driven stocks beyond the well-known names like GME and AMC.
Reddit, which was listed not long ago, has seen a 56% increase in a month. As the headquarters for the meme stock army, Reddit serves as their primary communication channel.
Their typical modus operandi involves targeting smaller-cap stocks with high short interest, which are often fundamentally weak and sometimes on the brink of bankruptcy. These stocks are attractive to short sellers who may have taken significant positions in them. With liquidity drying up, they become prime targets for a short squeeze, forcing short sellers to unwind their positions at much higher prices.
Remember Blackberry? It was a once-dominant phone brand have lost its shine but have recently become meme stocks. Blackberry (BB) is up 21% in a week.
Koss (KOSS), a brand of headphones that has fallen out of popularity, jumped 91% this week. It was also a meme stock back in 2020.
Tupperware, a favorite brand among our mothers, has filed for bankruptcy, yet the meme stock army drove its stock (TUP) up 62% in the past week.
Medical Properties Trust (MPW) saw its stock rise by 39% in a week after one of its most important operators, Steward Health Care System, went bankrupt. The stock has a short interest of 38%.
SunPower (SPWR), which installs solar power generation systems in homes, had a short interest as high as 96% at one point. Its stock has rallied 94% in five days.
Newegg (NEGG), an online retailer of computer hardware, is up 22% in the past week.
Even EV-related stocks like Lucid (LCID), Rivian (RIVN), and battery designer QuantumScape (QS) have seen meme stock activity, with their share prices jumping 19%, 17%, and 16% respectively in the past week.
There are certainly more stocks beyond this list, but it can be a good starting point for those interested in speculating. I am more likely to watch the excitement with my popcorn rather than get involved in them.
