Support.com, other new meme stocks dip, hitting pause in monster rally

Vinco Ventures

31/08/2021 19:32

By Sinéad Carew, Medha Singh and Saqib Iqbal Ahmed
    Aug 31 (Reuters) - A gaggle of so-called meme stocks were
mostly lower on Tuesday after eye-popping rallies in their
shares in recent days suggested that retail investors are still
eager to bet on companies popular in online forums.
    Shares of software company Support.com  SPRT.O  shot up 313%
in the six trading sessions through Monday and were up more than
1,400% year-to-date. They were down 11.3% on Tuesday afternoon. 
    Digital marketing company Vinco Ventures  BBIG.O , up 114%
since Thursday, was up 0.3% on Tuesday. E-commerce platform
Aterian Inc  ATER.O  fell 12.4% after gaining 60% in the last
two trading days.
    The recent moves were another sign that the wild rides
associated with meme stocks may be a feature of markets for some
time to come. For eight months now, Wall Street has witnessed
breathtaking rallies in shares of GameStop and other stocks
favored by individual investors gathering on forums such as
Reddit’s WallStreetBets.
    Another sign of the phenomenon's potential staying power
came Monday, when shares of Paypal  PYPL.O  jumped after a
report that it was exploring ways to let U.S. customers trade
individual stocks on its platform.  urn:newsml:reuters.com:*:nL4N2Q13LO
    On Tuesday, the Wall Street Journal reported https://www.wsj.com/articles/fidelity-is-going-on-a-hiring-spree-11630414800
 that Fidelity Investments plans to hire another 9,000 employees
this year due to surging demand for stock-trading and other
personal investing services. 
    "Retail trading and momentum is now a relevant facet of
daily trading," said Ihor Dusaniwsky, managing director of S3
Partners. “It moves prices and institutional investors take
notice." 
    Options trading is probably exacerbating moves in some
shares. Options volume for Vinco Ventures stood at 259,000
contracts early late Tuesday afternoon, making it the sixth most
active single stock name in the entire options market, according
to Trade Alert data. 
    AMC Entertainment Corp, which rose along with GameStop in
January and has seen subsequent rallies in recent months, was
the third most active, with 406,000 contracts. AMC’s shares were
last up 7.8%.
    Some of the newer meme stocks also sport unusually high
short interest, making them targets for investors seeking to
force a short squeeze. This can send share prices sharply higher
as bearish investors are forced to unwind bets against a stock.
    Short interest in the shares of Support.com, for instance,
recently stood at around 60%, while Vinco’s short interest was
at 20%, according to S3 data.
    Massive volumes in some of the shares are evidence that the
bulk of the gains came from bullish investors piling in rather
than bears closing out positions, Dusaniwsky said. Trading
volume for Support.com over the last three sessions, for
example, was 115 million shares, or about 6.6 times the 50-day
moving average. 
    This month, Support.com said a shareholder vote to merge
with bitcoin miner Greenidge Generation Holdings was scheduled
for Sept 10. Support.com announced it will become a wholly owned
subsidiary of the bitcoin miner in March.
    Plenty of market participants believe the meme stock craze
is unlikely to survive if the bull market ends whenever the U.S.
Federal Reserve unwinds the easy money policies that have helped
the S&P 500 double from its March 2020 lows. 
    "If ever this was a sign that there is too much idle money
in peoples' hands, meme-stock gambling is it,”  said David
Trainer, chief investment officer at an investment research firm
New Constructs. “As soon as the super loose money begins to
abate, I think you'll see folks be much more rational.”

 (Reporting by Sinead Carew, Medha Singh and Saqib Iqbal Ahmed;
Editing by Ira Iosebashvili and David Gregorio)
 ((Ira.Iosebashvili@thomsonreuters.com;))