Reddit traders keep the meme dream alive – The Average Joe

    Reddit traders keep the meme dream alive

    Victor Lei — Head of Research

    August 8, 2022

    August 8, 2022

    Did you think meme stocks were a passing fad? Think again. Two years later and investors are keeping the meme alive.

    Bed Bath & Beyond Reddit talks are heating up — becoming the most discussed stock on r/WallStreetBets in the past week.

    • Bed Bath & Beyond (NASDAQ:BBBY) jumped 40% yesterday — now up over 140% since July 26.
    • Meme stocks AMC, Express and Overstock also saw heavy action yesterday, rising 8-20%.

    What’s the big deal? $BBBY is what every investing course warns you about. Sales are declining, market share is falling, and the company is burning heaps of cash.

    They’re also having trouble finding a new CEO. Per Morningstar Analyst Jaime Katz — “it’s going to be tough to recruit someone” and “who’s going to want to run this?” (Bloomberg).

    Instead of fundamentals, meme traders often look for stocks with:

    • Low float — i.e., a low number of shares available to investors so that any small movement can impact its stock price.
    • High short interest — prone to short squeezes — are often targets for meme investors.

    Ryan Cohen’s involvement is also a bonus.

    Makes no sense: The rise of one little-known Hong Kong-based company may have sparked interest in meme stocks again.

    • AMTD Digital (NYSE:HKD) — a Chinese financial services firm — went public on July 15 and rose as much as 32,000% before falling.
    • At one point, AMTD Digital was worth more than Bank of America despite having only $25M in sales in 2021 (BofA revenue is 3,748x larger).

    Meme stocks are unpredictable, difficult to find and investing at the wrong time can be costly. We’ll stick with the boring but stable method of investing.

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