Graphic: Meme stocks ride on, though investors more cautious than GameStop era

Tupperware Brands

18/08/2023 11:00

By Saqib Iqbal Ahmed and Laura Matthews
       NEW YORK, Aug 18 (Reuters) - More than two years since a
breathtaking surge in shares of GameStop  GME.N  captivated Wall
Street, the meme stock phenomenon continues to defy predictions
of its demise. 
    Yet the retail investors who have driven past meme stock
moves appear to have become more cautious after last year's
market selloff, while rallies in the shares of the often small
and heavily-shorted companies bearing the meme stock label have
tended to be more fleeting.
    Here are some charts illustrating what has changed, and what
has not, in meme stocks. 
    
    
    A rally in a crop of recently minted meme stocks has already
hit turbulence as shares of companies including Tupperware
Brands  TUP.N , trucking firm Yellow  YELL.O  and American
Superconductor Corp  AMSC.O  tumble from highs touched weeks
ago, amid a broader selloff in U.S. equity markets, though many
are still far higher than they were earlier this year.
    Data from JPMorgan illustrate how quickly sentiment can turn
among individual investors, who have been among the key drivers
of moves in meme stocks. Retail investors sold a net $852
million in single stocks in the past week. Over the last four
weeks, they have wiped out all inflows the category had seen
since the debt ceiling resolution at the end of May, the data
showed.
    The Roundhill MEME ETF  MEME.P , which tracks the
performance of a basket of meme stocks, is down about 55% from
where it started trading in December 2021, though up about 38%
for the year.
    
    A quick rise, often followed by a rapid descent, is a fate
common to meme stocks of both the past and present. Analysts at
Vanda Research, however, say investors in recent months are
putting less money into shares of individual companies and are
less likely to stick with their trades than they were in 2021.
    In some cases, that has resulted in rallies that are far
less dramatic than the ones witnessed in the phenomenon's
earlier days. For instance, at its closing high on Jan. 27,
2021, GameStop's stock price had logged a one-month gain of more
than 1,600%, with one-month net retail flows at the peak of its
initial rally totaling around $460 million, Vanda's data showed.
    In contrast, C3ai  AI.BLUEd , which this year has benefited
from investor excitement over artificial intelligence, drew a
one-month net total of $285 million in June, when the stock hit
a peak that saw it up 314% year-to-date. 
    Individual investors may still be licking their wounds after
a drubbing in markets last year, with the average retail
portfolio off between 20% and 25% from its all-time highs,
compared to the S&P 500, which is off 8.3% from its 2022 peak,
said Marco Iachini, Vanda's senior vice president. 
    Retail players "think twice before chasing these
opportunities and if they do, they don't stick with them for as
long as they did in '21," Iachini said. 
    Of course, there are exceptions. Shares of Tupperware
Brands, which had been trading below $1 before its rally drew
just $32 million of net retail inflows between mid-July and
early August, Vanda's data showed, at its peak was up 85% from a
month ago.
    Jonathan Krinsky, chief market technician at BTIG, said the
most recent rally in suggested traders had been hunting for
"lower quality" stocks they believed could catch up with shares
that had already soared.


    

    Despite the recent wobble, retail participation in the
market remains strong, after interest in stock trading surged
during the pandemic. Global retail net flow is expected to reach
$295.62 billion this year, just shy of the 2022 record of
$301.36 billion, Vanda's data showed.
    
    At the same time, the latest batch of meme stocks - like
many before it - is also drawing the attention of institutional
investors who bet on share price declines. 
    Still, few have approached the levels of short interest seen
in GameStop, which had 170% of its sales sold short in late
December 2020, as high demand to short the shares led to the
same shares being lent out multiple times. 
       
  
    Options activity by retail investors continues to be a
factor in driving many meme names higher, though volumes are far
off levels seen in 2021. 
        At its peak, on average, 3.1 million AMC Entertainment
 AMC.N  options contracts changed hands daily. In contrast,
Tupperware drew just under a 100,000 a day at its peak.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: Meme stocks: New kids on the block    https://tmsnrt.rs/3ORNwKx
GRAPHIC: Meme stock vintages    https://tmsnrt.rs/3KGCQfh
GRAPHIC: Holding strong    https://tmsnrt.rs/3qyd0mS
GRAPHIC:  Short story    https://tmsnrt.rs/3YCtYNt
GRAPHIC:   Options action    https://tmsnrt.rs/3sl0bN4
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Saqib Iqbal Ahmed and Laura Matthews; Writing by
Ira Iosebashvili; Editing by Jamie Freed)
 ((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 332 219
1971; Reuters Messaging:
saqib.ahmed.thomsonreuters.com@reuters.net))