Last year’s meme stock trading frenzy might have come to an abrupt end in 2022, but the market remains rife with high-short-interest stocks that could be ripe for a short squeeze. While a lack of interest in looking at fundamentals still appears to be a guiding force, some companies that are considered meme stocks today do possess good fundamentals. The following three meme stocks are companies that shouldn’t be ignored. The videogame retailer and original meme stock exited the third quarter with cash and cash equivalents of $1.210 billion, compared with $1.195 billion at the end of the prior quarter.

He also linked to the Wall Street bets forum, where he’s lovingly referred to as Papa Musk. Imagine you borrow some Pokemon cards from a mate, because you think the price of them is about to drop, and agree to give them back in a month. Vanderbilt professor White told ABC News that this “David versus Goliath” saga “reflects a lot in our society” amid a pandemic that has exacerbated income inequality. “This has captured the attention of America and every trader and non-trader alike,” Left said. He added that he respects the market and has “respect for the people on the Wall Street Bets and on Reddit message boards.”

  1. After three years of falling revenue and consistent losses instead of profitability, GameStop has to do a lot of rebuilding.
  2. GameStop was one of the companies that loads of hedge funds (companies who do these bets) had bet on to lose a lot of value.
  3. On the other hand, GameStop has been relatively clear about its finances and business outlook.
  4. This huge disconnect between GameStop’s stock price and how the company is actually doing has created one of the more bizarre moments in Wall Street’s over 200-year history.
  5. He added that in many ways “there’s really no difference” between what this Reddit army did and what hedge funds or institutional investors do when they see a stock that is mispriced in some way.

Many of these stocks have poor investment fundamentals and you do not want to be around when the light bulb goes off and investors realize the stock is not going to perform well in the long run. If you hold too long, you will likely lose because the short squeeze ends, and then the stock price falls; you could lose all of your gains. This past year, the squeezes were so amplified because of the small- to mid-cap companies selected. When a smaller company has an extraordinary trading volume, it is amplified compared to a mega-cap company. The ad tech firm currently trades for a roughly $100 million market capitalization, valuing its shares at about 0.3X price-to-sales (P/S). That’s the same as GameStop’s valuation immediately before its short squeeze and about eight times lower than the average U.S. firm.

GameStop, based in Grapevine, Texas, sells video games at more than 5,000 stores, and the pandemic has been keeping customers away. More worrisome is the long-term shift by customers away from brick-and-mortar stores and toward buying games online. The return on highly shorted stocks is currently the highest ever recorded, he said. Still, the rally of heavily shorted stocks has taken place against a “backdrop of very low levels of aggregate short interest,” he added, though noted there could still be significant losses for hedge funds. In the past month, I have been told multiple times hedge funds were too clever to allow this again.

“In the last three months, a basket containing the 50 Russell 3000 stocks with market caps above $1 billion and the largest short interest as a share of float has rallied by 98%.” And, the theory goes, many retail investors used their cheques to invest in the stock market. Steven Cress is the Head of Quantitative Strategies and Market Data at Seeking Alpha. Steve is also the creator of the platform’s quantitative stock rating system and many of the analytical tools on Seeking Alpha. His contributions form the cornerstone of the Seeking Alpha Quant Rating system, designed to interpret data for investors and offer insights on investment directions, thereby saving valuable time for users. He is also the Founder and Co-Manager of Alpha Picks, a systematic stock recommendation tool designed to help long-term investors create a best-in-class portfolio.

The Next GameStop? 25 Stocks With High Short Interest

Gill also posted screenshots of his GameStop portfolio on r/wallstreetbets as far back as 2019. Gill and other members of the forum also cited the bullish GameStop stance of Michael Burry, the legendary trader who was portrayed by Christian Bale in the 2015 film “The Big Short,” as fuel for their investment choices. Other heavily shorted stocks have been seeing a surge of interest recently as investors look for the next GameStop. American Airlines, BlackBerry and other formerly downtrodden stocks have had extreme swings in price this week.

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Top Penny Stocks for 5,000% Upside in 2024 and Beyond

This is an explosive combination and we have found the screen has generated recommendations that have performed very well. Rich Duprey has written about stocks and investing for the past 20 years. Palantir Technologies was called the “best pure-play” in AI and also like AMD, should get its quarter’s worth out of this ride. Where once it was firmly just a government agency numbers cruncher, the big data outfit now is firmly ensconced in the commercial market. Revenue from the U.S. enterprise segment is rapidly rising, shooting 70% higher to $131 million last quarter. It reported more than $1 billion in commercial revenue for the full year.

Quite a remarkable comeback but there is still much more room to grow. On the other hand, GameStop has been relatively clear about its finances and business outlook. The company has kept top-tier auditor Deloitte & Touche since 2013 and frequently updates shareholders in its detailed earnings calls. CEO Matt Furlong is refreshingly straightforward about GameStop’s prospects. In 2022, all that changed when Troika bought out Converge, LLC, an ad tech firm generating around $21 million in profits annually.

Shares in Robinhood Markets (HOOD, $14.40), whose free app became ground zero for meme-stock trading volume, have slumped almost 20%. The Roundhill Meme ETF (MEME, $11.93) is off 15% for the year-to-date. With the stock now trading north of $23, Palantir is up over 260% over the past year.

Jan. 28, 2021: Robinhood and other platforms restrict transactions for GME, lawmakers react

In a July 27, 2020, YouTube video posted to his channel, Gill said, “Some people won’t even tune into the stream right now when they hear I’m bullish on GameStop, at the current price point it’s traded at about four bucks right now.” “We are excited to bring our customer-obsessed mindset and technology experience to GameStop and its strategic assets,” Cohen said in a statement at the time. Still, the company reported an operating loss of $63 million in the third quarter.

The volume of shares being traded had risen to 5.26 million as of this writing, with recent volume averaging about 3.8 million shares. Steve is passionate and dedicated to removing emotional biases from investment decisions. Utilizing a data-driven approach, he leverages sophisticated algorithms and technologies to simplify complex, laborious investment research, creating an easy-to-follow, daily updated grading system for stock trading recommendations.

But lately it’s been more about inflicting pain on short sellers, hedge funds and other big financial firms. Many talk about it in terms of evening the ledger with the financial elite, who benefited from years of gains as other people fell further behind. The struggling video game retailer’s stock has been making stupefying moves this month, wild enough to raise concerns from professional investors on Wall Street to the hallways of regulators and the White House in Washington. Believing GameStop overpriced, hedge funds had “shorted” the company, betting the share price would fall.

Although a number of meme stocks remain, many have been replaced by more traditional short bets. The one that’s important in this story is called wallstreetbets. More than four million people are in it, usually discussing stocks and shares and where they’re going to invest money. The now-legendary r/wallstreetbets page was started in 2012, according to a Wall Street Journal interview with one of the founders.

Is TRKA Stock the Next GameStop? Why Reddit Thinks So.

As you can imagine, a short squeeze is bad news for short sellers- but very good news for investors who took a bullish bet on the stock. The short Interest data metric as an investment factor has been the flavor of the year. Historically, it is a pretty poor factor for forecasting long-term performance. After all, most investors short stocks because it is perceived they have poor investment fundamentals. But during a market cycle of short squeezes, it is a highly coveted data point. For over a year, interest in this data point has run strong and speculator’s enthusiasm does not seem to be slowing.

Still, he expressed worry about what comes next — and how GameStop falling will ultimately impact these individual investors and faith in the stock market at large. A few days later, Tyler Winklevoss tweeted a link to reports about the film and said that when the movie comes out he and his brother will be renting AMC theaters (another popular stock within r/wallstreetbets) for “premiere parties.” “It was not because we wanted to stop people from buying these stocks,” Robinhood wrote in a company blogpost. The manager of hedge fund Melvin Capital also on Wednesday admitted to CNBC that the fund was letting go of its GameStop shorts. Sources familiar with Melvin Capital confirmed to ABC News that the hedge fund lost 53% of its total investments in January. “So it started out as kind of a little bit of a value investing story,” he added.

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