The meme stocks rage is back with cinema chain AMC seeing a resurgence, jumping almost 47% in the month to date, and home retailer Bed Bath & Beyond (BBBY) surging up to 360% in August. GameStop also recorded fresh retail interest, but it was small with only 19% gains.
This reflects a turnaround in risk assets from a quiet July when the macro environment was tense. Markets were spooked in the past few months by tighter monetary policy to tackle soaring inflation. There were also alarm bells about a recession. The meme stock frenzy concurs with a jump in the cryptocurrency counterparts – Dogecoin gained 16% this month and Shiba Inu 24%.
Jae Yang, CEO of Tacen, attributed the rises to market events stabilizing somewhat, and stocks climbed from their mid-June lows. He highlighted that S&P 500 and NASDAQ 100 are up around 4%. Yang believes there is still a bit of money out there that people are willing to risk and this is a good sign. He says traders tend to wait for volatility squeezes and catalysts to push trade volumes.
The GameStop short squeeze, in January 2021, brought attention to stocks that were highly shorted by Wall Street institutions. This prompted a group of Reddit traders to inject embattled stocks in a meme-fuelled defiant display of retail power and influence over the stock market. The meme coins are relatable to the retail investor crowd as they are fun to trade. Santiago Portela, CEO of FITCHIN, thinks there is a group of people that really like the concept of meme coins and meme stocks. They are saying that they are having fun and want to have fun. Investing in dog coins (Dogecoin and Shiba Inu) stuck a major chord during the previous bullrun – with Tesla boss Elon Musk hyping Dogecoin on Twitter. He also referred to the meme coin as a hustle on Saturday Night Live.
Manuel Ortiz-Olave, co-founder at Brickken, said meme coins are the most affected by bear markets as participants usually invest – trying to capture a speculative rally that could trigger huge returns. Daniel Tal, project lead at ICHI which is a crypto infrastructure startup, believes the market for meme coins is solely based on speculation. He said the sentiment is driven by the approach of Ethereum’s Merge. While, there could be a larger usage of some coins like Dogecoin, it may have little to do with the increase in price.
