Yahoo Finance ETF in Focus on Meme Stock Mania's Two-Year Anniversary
The phrase “meme stock” refers to a stock that gains immense attention on social media platforms like and online forums like Reddit, WallStreetBets and Robinhood. Meme stocks are triggered by small traders who cause a short squeeze on the stock.
Short squeeze is a term used by market participants to refer to a phenomenon where short sellers in a stock, who have placed their bets on its fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses. This results in a stupendous rally in share prices.
Inside the Meme-Mania
Investors should note that companies that were at the heart of the meme-stock mania that started on Jan 28, 2021 have raised a total of $4.7 billion, according to calculations by the Financial Times. Bed Bath & Beyond BBBY, GameStop GME, and AMC Entertainment AMC were among the top 10 most talked-about stocks. The eight such stocks have amassed a total of $7.5 billion in market capitalization.
Financial Times noted that GameStop has raised $1.8 billion in the past two years. Thanks to a 20-times jump in shares in January 2021, AMC has raised $2.8 billion from sales of equity, new debt and luring big new investors, according to FT calculations.
All are not successful though. Bed Bath & Beyond, however, is on the verge of a likely bankruptcy and recently disclosed receiving a notice of default from the bank JPMorgan Chase. Cineworld, one of the sought-after cinema chains, filed for bankruptcy protection in September.
Meme Rally in 2023
While the trend fizzled occasionally in 2021 and 2022 due to rising rate worries and share market crash, the sheer return of risk-on sentiments this year has boosted the meme stocks once again. Some stocks like MicroStrategy, Coinbase, AMC Entertainment, and Peloton have been exhibiting solid rallies in the first few weeks of this year, The Street article noted. The turnaround in the cryptocurrency and technology market has mainly bolstered the meme rally in 2023.
Word of Caution
However, the past two-year experience taught us that investing in these stocks is a risky choice and could result in heavy losses. This is because when excitement surrounding the stock cools down, it could lead to a freefall in share price. The fundamental health of these companies is not sound in most cases. And at the end, fundamentals matter for holding a stock for the long run.
Against this backdrop, below we highlight Meme Stock ETF MEME in detail.
The Meme Stock ETF (MEME)
The underlying Solactive Roundhill Meme Stock Index consists of 25 equal-weighted U.S. listed equity securities that exhibit a combination of elevated social media activity and high short interest. The MEME ETF is the first ETF globally explicitly designed to track the performance of meme stocks. The fund charges 69 bps in fees.
The fund’s top three holdings are Lucid Group (5.69%), Tesla (5.25%) and Coinbase (4.43%). The fund has gained 26.1% this month (as of Jan 27, 2023). However, the fund is off 38.1% past year.
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GameStop Corp. (GME) : Free Stock Analysis Report
Bed Bath & Beyond Inc. (BBBY) : Free Stock Analysis Report
AMC Entertainment Holdings, Inc. (AMC) : Free Stock Analysis Report
Roundhill MEME ETF (MEME): ETF Research Reports