Huge rallies boost Tupperware, Yellow shares into 'meme stock' club (updated)

Tupperware Brands

01/08/2023 20:26

(Updates prices, adds analyst comment)
    By Medha Singh and Chibuike Oguh
       Aug 1 (Reuters) - 
    Shares of Tupperware Brands Corp,  TUP.N  Yellow Corp
 YELL.O  and other U.S. companies have soared in recent days,
reminding analysts of so-called "meme stock" rallies in which
strong demand from retail investors fueled huge gains in stocks
that had fallen out of favor on Wall Street.
        Shares of trucking company Yellow jumped more than 78%
on Tuesday, after more than doubling in the previous session,
following a news report that private equity firm Apollo Global
Management  APO.N  was nearing a deal to provide new capital to
the firm after it ceased operations and prepared to file for
bankruptcy.
        Home and kitchen product maker Tupperware Brands Corp's
stock rose more than 32%, after sky-rocketing by more than 575%
over the past seven sessions despite no material changes to the
company's health. Tupperware said in April it was nearing
bankruptcy, weighed down by a $705 million debt burden and
slumping sales.
        Analysts likened the surge in Tupperware and Yellow to
stellar rallies seen in shares of other struggling companies
including home goods seller Bed Bath & Beyond  BBBYQ.PK , nail
polish maker Revlon and car rental company Hertz Corp  HTZ.N .
  
        "I think people always want to buy the stock that is
going to be the one that explodes to the upside," said JJ
Kinahan, chief executive at IG North America.
  
        "Another aspect is that these are often companies with
products people know and so that also leads to a certain
attraction. The last reason I believe is the large percentage of
short interest in these companies," Kinahan added.
  
        The original meme stock rallies, most famously, involved
retailer GameStop and movie theater chain AMC Entertainment.
Their unexpected share price gains were exacerbated by a "short
squeeze" on professional investors who had bet that the
beaten-down shares would fall further. The sharp gains were
attributed mostly to individual traders posting on social media
sites.
  
    Tupperware and Yellow's stocks are currently among the top
10 most watched equities on Stocktwits, a popular website with
retail investors. Other companies on that list are American
Superconductor Corp  AMSC.O , a small power technology firm
whose shares have risen by 57%, and electric vehicle (EV) maker
Nikola Corp  NKLA.O , which is up 18%.
        Yellow and Tupperware were the second and third most
traded stocks by retail investors as of 2 p.m. EDT on Tuesday,
behind only EV maker Tesla Inc  TSLA.O . Nikola and American
Superconductor took the fifth and sixth spot, respectively, J.P.
Morgan data showed.    
        Market orders from retail traders made up 17.6% of total
market flows on July 31, up from a near six-month low of 14.8%
on July 20, according to J.P. Morgan data. Roundhill's Meme
index  .MEME  had hit a more than one-year high on Monday.
  
   "There is really no logic," said Dan Raju, CEO of brokerage
Tradier. "Interest rate hikes tapering off pushes directional
traders to jump back into the market, touch the social media
echo chambers and they latch on to - generally what I call -
unprofitable companies riddled with debt, creating these meme
stock rallies," Raju added.

 (Reporting by Medha Singh in Bengaluru and Chibuike Oguh in New
York; Editing by Devika Syamnath and David Gregorio)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; Twitter: https://twitter.com/medhasinghs;))