Trading in so-called stock memes kicked off this week, with chatter abuzz about the potential for short squeezes.
Another batch of names has been added to the meme-stock frenzy as retailers add their latest favorites Wednesday.
Prison operator GEO Group Inc. raised 60% and Clean Energy Fuels Corp. jumped 24% starting at 2:32 p.m. in New York, replacing names like ContextLogic Inc. and Clover Health Investments Corp. who had led the highest charge Tuesday. In Europe, Air Berlin jumped 138% from 54% the day before. Meanwhile, shares of fast-food restaurant chain Wendy’s Inc. they reversed gains on Tuesday after Northcoast and Stifel lowered shares to hold equivalent buy recommendations.
Trading in so-called stock memes started this week, with chatter building on WallStreetBets and other social media platforms about the potential for short squeezes as investors in forums protesting against short sellers.
The speculative frenzy among Reddit’s preferred names has been particularly pronounced since a wider stock market hasn’t gone anywhere for most of the past month. While the shares of AMC Entertainment Holdings Inc. and Clover Health jumped at least 85% in June, the Russell 3000 index rose just 1%.
“The meme stock mania is a liquidity phenomenon,” said Matt Maley, head of market strategy for Miller Tabak + Co. with algos) who have a lot of money pushing these things around ”.
The volume of options has picked up amid recent exuberance in some stock memes. The volume of the single-day stock option increased to about $ 383 billion last week, Barclays analyst Maneesh Deshpande said in a note.
“One of the surprising dynamics in the past week has been the cooling of the single-action deficit (in the rest of the universe) as retail options activity has picked up and demand for calls to the height on meme stocks has increased, ”Deshpande said in the report.
On Wednesday, the chairman of the U.S. Securities and Exchange Commission Gary Gensler asked the agency to conduct a review of the structure of the stock market, including the so-called best execution requirements. This comes after the SEC said earlier this week that it was scrutinizing the markets for signs of manipulation as meme stocks continue to grow.
GameStop Corp., which launched the meme craze in January, reports first-quarter results after the business closed today. At the video game vendor’s annual meeting this morning, newly elected president Ryan Cohen made a shout out to traders who fueled the stock rally. “We are fortunate to have such a unique group of investors who own the company’s shares,” he said.
Wendy’s was reduced to holding shares in Stifel, which it said the stock’s valuation fully reflects the growth it had presumed to reach its target price of $ 25. Analyst Chris O’Cull said in a note that it is still “constructive towards the company’s fundamental prospects.”
Other stocks are moving higher today and have a high floating rate interest rate, according to data from IHS Markit Ltd. from 2:32 pm in New York:
- Atomera Inc., with 12% short interest, gained 22% Wednesday
- Clovis Oncology Inc. has a short interest rate of 34% and has increased 14% today
- Genius Brands International Inc. has increased 13% and has a short interest rate of 13%
- Inovio Pharmaceuticals Inc. jumped 16% Wednesday and has short-term interest of 26%
- Invesco Mortgage Capital Inc. increased 19% Wednesday and has short-term interest of 12%
- PubMatic Inc. has a short interest rate of 47% and has increased 10% today
- Root Inc., with 14% short-term interest, gained 23% Wednesday
- SmileDirectClub Inc. has raised 10% and has a short interest rate of 18%
- World Wrestling Entertainment Inc. added 11% and has a short interest rate of 23%
- Ziopharm Oncology Inc. has a short interest rate of 14% and a 13% escalation