Latest news with #memestocks
ABC News
a day ago
- Business
- ABC News
Analysts say 'greed is good' is back, as euphoria emerges in global financial markets
Analysts say global financial markets are entering a euphoric but potentially dangerous speculative phase. Such phases are typically characterised by investor mania for so-called meme stocks, made popular on the share market by social media posts. But investors are also chasing after cryptocurrencies, gold and small-cap stocks, or stocks with relatively low prices. Adelaide woman Lisa, who only wants to use her first name for privacy reasons, buys so-called penny stocks in small companies trading on the share market. She trades stocks in the resources, information technology and pharmaceuticals sectors. "And also because of their small nature, often they're overlooked by the larger managed funds, superannuation funds, for example." Lisa first bought $500 worth of shares in 2001, and now has a $100,000 share market portfolio returning 18 per cent per annum. A typical stock market return, according to analysts, is anywhere between 7 and 10 per cent per annum. Lisa shares trading ideas with other investors on several social media platforms. "One of my favourites would be Straw Man, which is a private investors club where people share ideas of companies that they've researched," she said. "I also look at a couple of others like Hot Copper, Inside Trader, The Motley Fool and MSN News, occasionally, just to give me ideas, and then I'll take those ideas and do my own research." In January 2021, retail investors bought American meme stock GameStop, after positive reviews of the company went viral in an online investing forum on Reddie . Marcus Today senior portfolio manager Henry Jennings said this type of frenzied trading activity was popping up again. "Shorting" stocks is when big investment firms borrow stocks they see as overpriced, only to sell them. They buy the stock after the share price falls, and return it to the owner, having made a profit. GameStop was being heavily shorted in the market in 2001, so when retail investors bought it up, the big investment firms started to lose money on their "shorts" as the price stopped falling and began rising. "And if there's enough of them, do that at one particular time, they can push stocks to outrageous gains and outrageous moves," Mr Jennings said. "So it is, I guess, a sign of irrational exuberance to some extent." Roger Montgomery, who runs Montgomery Investment Management, is also seeing meme-stock mania. "Last week we saw, for example, the share prices of Wendy's, GoPro and others jump," he said. "I think Krispy Kreme was the other one to jump by as much as 80 per cent just in a couple of days. "That's telling you that things are getting a little bit hot again." Mr Jennings warned investor euphoria is taking hold again in financial markets, making "Star Entertainment look like a Sunday afternoon bongo club." "I guess primarily the reason is the animal spirits are running pretty hot at the moment," he said. "You know, we've got markets around the world at all-time highs. "Despite the news from tariffs, the optimism is high, but Trump is making America great again and greed is good. While that may sound concerning, Mr Montgomery said investors were buoyed by the amount of cash coming from central banks. He said this was supporting stocks and other financial markets' assets. "The Chinese Central Bank has injected something like 10 trillion renminbi into the market over the last six months," Mr Montgomery said. "And because there could be a slowing economy from Trump's tariffs, the US Federal Reserve is expected to engage in Quantitative Easing [money printing], or more Machiavellian versions of that, and inject more liquidity into the market as well." There is, however, no shortage of risk facing investors across the globe. Analysts point to problems from US President Donald Trump's Big Beautiful Bill, uncertainty around global tariffs, and the health of China's economy — all of which have the potential to drag markets down again. Rising bond yields, which can hurt stock prices, are also a concern. But Mr Jennings said the risks investors did not see presented the most danger to financial markets and the economy. "It's not really the risks that you can see that are going to trap us and trip us up," he said. "It's the ones that you can't see. Locally, Australian companies are yet to report their full-year earnings for the 2024/25 financial year, so analysts are not yet able to compare stock prices to recent valuations. But the ABC understands the broad expectation is that Australian companies will remain profitable. There is also hope of several interest rate cuts, which would boost overall demand in the economy by early next year. Lisa, for one, is holding onto her stocks. "Even if they're down for six months, a year, two years, they will go back up again to what they were at, [or] … above what their previous high was." Australian investors may also react to second-quarter inflation figures due from the Bureau of Statistics on Wednesday, which could determine whether the Reserve Bank cuts interest rates again next month.
ABC News
a day ago
- Business
- ABC News
'Everything rally' is underway, says market strategist
Roger Montgomery from Montgomery Investment Management says financial markets are seeing "everything rally", from meme stocks, Bitcoin to even meme coins, driven mostly by liquidity.
Yahoo
2 days ago
- Business
- Yahoo
Is Investing in "The DORKs" a Good Idea Right Now?
Key Points The DORK stocks -- Krispy Kreme, Opendoor Technologies, Rocket Companies, and Kohl's -- are getting attention. Each of these companies is losing money, but trading volume is spiking. 10 stocks we like better than Krispy Kreme › There's a new investing trend out there. Well, perhaps "newish" is the best way to put it, because to my eyes this is just a recycling of the meme stock fad that swept through the markets four years ago. That didn't end well for a lot of people, and I have similar expectations for this one. The stocks feeding into this trend are known as DORK stocks -- an acronym for the stock tickers of Krispy Kreme (NASDAQ: DNUT), Opendoor Technologies (NASDAQ: OPEN), Rocket Companies (NYSE: RKT), and Kohl's (NYSE: KSS). Just as in the meme stock boom of old, some of these companies are seeing wild changes in price and valuation for no good reason. But the trading volume is up as investors' interest is piqued. If the DORK stock name isn't enough to scare you off, then perhaps a closer look at the companies would do it. However -- and I can't stress this enough -- investing in DORK stocks seems to be a really bad idea. If you're itching to try it, here's what you should know. Hype isn't a realistic strategy First, let's take a look at the companies. Krispy Kreme makes great doughnuts, but I'm not willing to say it's a good investment today. Opendoor, which operates a digital platform that allows people to sell their houses, is linked closely to Rocket Companies, which allows people to apply for mortgages and manage their money. Kohl's is a struggling big-box clothing retailer. Krispy Kreme saw first-quarter revenue drop by 15% from a year ago, and posted a loss of $33.4 million and an earnings per share loss of $0.20. Opendoor's Q1 revenue dropped by 2%, to $1.2 billion, and the company posted a net loss of $85 million. Rocket saw its Q1 revenue drop 25% from a year ago to $1.03 billion, and posted a loss of $212 million. And Kohl's saw net sales for the first quarter drop 4.1% to $3 billion. Like other DORK names, Kohl's was in the red for the quarter, posting a loss of $15 million. So, the DORK stocks, at least today, are officially losers. But there are a few meme-type catalysts that are pushing them into the public eye, such as short interest. Rocket and Kohl's both have more than half of their outstanding shares shorted, while Opendoor has more than 30%. All of those numbers are incredibly high. When investors short a stock, they're betting that the price will go down, so there's a lot of money out there betting that these names will drop. Retail investors can lap up additional shares in hope that hedge funds that are betting against a stock will find themselves squeezed and have to sell at a higher price -- similar to the infamous short squeeze of GameStop in 2021. We're back to 2021 I know there are lots of retail investors who enjoyed the 2021 meme stock fad that included names like GameStop, AMC Entertainment, and BlackBerry. I wasn't one of them. In fact, I wrote pretty stridently against investing in meme stocks, because I see it as a sure way of losing money over the long term. When you're trading on pure momentum without a solid underlying business, you're just asking to lose your money. Some of the DORK stocks are already showing major volatility. Kohl's, which normally has a trading volume of 13 million shares, saw 209 million shares traded on July 22. The stock price jumped 120% over a two-day period, but has since lost nearly all those gains. Opendoor became hot when a hedge fund manager put a price target of $82 on the stock, which had been struggling to remain at more than $1 and avoid potentially being delisted from the Nasdaq. Now Opendoor is up 380% in the last month (although at this writing, it still trades for less than $2.50 per share). The stock saw massive trading volume of 1.8 billion shares on July 21 and 1.07 billion shares on July 23. (Its average volume is only 164.8 million shares.) Krispy Kreme's shares haven't been as volatile (probably because the short interest is comparatively low). But it still had more than 152 million shares trade hands on July 23, compared to its average trading day of 8.2 million. Rocket Companies also saw action July 22 and July 23 as more than 51 million shares changed hands each day, versus the company's average trading volume of 15.4 million shares. But the reality is that you can't time the market, and many more people lose money than win trades with meme stocks. Because short-term stock prices are a product of supply and demand, you can't predict how a stock price will move -- and if you guess wrong, you could sustain some big losses. How to invest My advice is to hold back. There are hundreds of better choices than a meme stock, and you should instead be looking for names with good fundamentals, decent profit, and a sustainable business model. But if you are determined to invest in DORK stocks, hedge your bets. Invest responsibly, with only a small part of your portfolio that you are willing to lose. You never want to overplay your hand, particularly with volatile investments -- and those include DORK stocks. Should you buy stock in Krispy Kreme right now? Before you buy stock in Krispy Kreme, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Krispy Kreme wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and Rocket Companies. The Motley Fool has a disclosure policy. Is Investing in "The DORKs" a Good Idea Right Now? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
The latest meme stock mania is being driven by a historic short-squeeze that raises the risk of a downturn, Goldman warns
The boom in meme stocks is being driven by a historic short-squeeze, Goldman says. A basket of stocks with the highest short interest is up 60% in three months, the bank said. The stock market often posts outsize gains after a burst of speculation, but this can raise the risk of a downturn. Bullish exuberance among retail traders drove a new meme stock rally this week. According to Goldman Sachs, it's just the latest episode in "one of the sharpest short squeezes on record." And while it's got room to run, it also raises the risk of a downturn, the bank said. Analysts said this week's rally in meme stocks, which saw companies like Opendoor, Kohl's, and other so-called DORKs surge, is part of a historic short-squeeze that recalls similarly bullish moments like 2000 and 2021. The bank said that heavily shorted stocks beloved by retail traders have trounced the broader market in the last few months. A basket of stocks popular with the retail crowd and another basket that tracks the most-shorted stocks have been up 50% and 60%, respectively, since April, compared to 28% for the broader S&P 500. Goldman Sachs' Speculative Trading Indicator — a gauge for how much trading activity is attributed to unprofitable stocks, penny stocks, or stocks with high valuations — spiked to its highest level since around 2021. Despite the frothiness, it's actually good news for near-term returns. When the gauge shows a sharp increase over a three-month period, stocks have typically outperformed for the following twelve months. However, the bank warned that the music eventually stops, and such wild bursts of euphoric trading actually raise the risk of a decline. "The recent rise in speculative trading activity signals near-term upside risk for the broad equity market but also increases the risk of an eventual downturn," the analysts wrote. The meme stock rally this week has fanned concern among other market forecasters, though many say the broader market still appears healthy. Michael Brown, a senior research strategist at Pepperstone, told Business Insider that stocks are still being propped up by a resilient US economy, strong corporate earnings, and optimism over President Donald Trump's trade deals, though sentiment was approaching extreme levels. Art Hogan, the chief market strategist at B. Riley Wealth Management, said he didn't believe meme stocks were a symptom of a larger valuation problem in the market, calling the latest rally "more noise than it is a signal." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Guardian
3 days ago
- Business
- The Guardian
From Krispy Kreme to GoPro, has meme-stock trading frenzy returned?
Shares in struggling retailers and ageing consumer brands surged, as amateur traders cast aside Wall Street's skepticism and mobilized online. It's like 2021 all over again. But the latest meme-stock rally could be even bigger than its predecessor four years ago, when investors piled into recognizable but unloved stocks, such as the video games retailer GameStop and the movie theatre chain AMC, according to the founder of the Reddit forum that helped whip up the frenzy. Retailer Kohl's, camera firm GoPro, fast-food chain Wendy's and doughnut chain Krispy Kreme each staged rapid rallies this week, driven by abrupt surges in trading volume reminiscent of the the meme-stock craze of 2021, when social media memes boosted a collection of struggling stocks, triggering extraordinary and volatile leaps in value. Actress Sydney Sweeney helped bring clothing retailer American Eagle Outfitters into the mania after it was announced the Euphoria and White Lotus star would front the brand's latest marketing campaign. The company's shares surged about 10% in trading on Thursday. Meme stocks are 'about to leap-frog in size and scope and scale, so that retail traders are going to redefine what matters', according to Jaime Rogozinski, founder of the wallstreetbets Reddit forum behind many of the volatile rallies. 'The world of finance is clearly changing, with blockchain technologies encroaching, and AI agents that trade on their own,' he said. 'And the collective of retail traders is adapting along with it.' Rogozinski founded wallstreetbets in 2012, but said Reddit ousted him as a moderator in 2020. His bid to sue the social media company for trademark infringement was dismissed by the US court of appeals for the ninth circuit last month. The forum's users home in on stocks and share their own research. 'It's a decentralization of power of who can be financial analyst,' said Noor Al, a moderator on wallstreetbets. 'Great ideas can now come from anyone, anywhere. 'We're seeing the power of retail push stocks, sometimes to the tune of billions of dollars, through the power of ideas, the power of community and the power of the people,' he added. The meme-stock craze of 2021, which produced stars such as Roaring Kitty, was a product of the Covid era, when many amateur traders were stuck at home and flush with pandemic stimulus cash. Whether this latest frenzy produces similar winners is not yet clear. Kohl's finished the week up 32%, GoPro was up 66% and Krispy Kreme was up 41%. The rallies show some investors are willing to take on more risk, as stocks scale record highs and the market, dominated by big tech, becomes harder to beat. Often, meme-stock bets are unbound from economic fundamentals, as investors move to support a brand for romantic or ideological reasons. Donald Trump's Trump Media & Technology Group, home to Truth Social, is valued at more than $5bn on quarterly revenue of about $1m. The wallstreetbets ethos 'has always to some extent been about flaunting and exploiting the ironies, relevance or irrelevance' of the stock market, said Rogozinski, who pointed to Wendy's, the hamburger chain, as a good example. 'Wendy's has always been a meme that goes back a decade. It brings a smile to my face, because on Reddit there's always been this thing where they say: 'Sir, this is a Wendy's.' 'It's an inside joke, and I don't even get where it started. It's just a meme,' he added. The stock's fleeting rise – it rallied 10% in two days, but finished the week broadly flat – shows some retail investors do not necessarily care about the typical factors that drive the market, such as tariffs and war in the Middle East. 'It's this ability for us to almost make fun of the financial system.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Long-term institutional players will always get the last laugh, Rogozinski conceded, because prices will return to normal valuations. 'But in the short term there's lot of money to be had with this volatility, and the fact that stocks are able to move up and down with such ease is but a mere showcase for how the financial system needs a facelift in relevancy.' While current market conditions do not replicate the low interest rates and retail investor buoyancy of the Covid era, market records and a robust economy have made meme stocks attractive once again for some. 'You see all these indications where this is full-blown meme mania,' Brent Kochuba, founder of derivatives-data firm SpotGamma, told Bloomberg. 'The macro economic environment really favors the retail and speculative plays,' agreed Al. 'I think were only going to see more speculation and excitement. It's a good time to tune in, because retail players can react and provide insight faster.' Days traders are not necessarily bothered by a company's financial performance, said Rogozinski. 'You have this activist, elective investor who is saying, 'I don't care what the financial statements look like, I don't care what the discounted cashflow is, I like the food, I like the video-game store, I like the meme. So dude, you can go back to Excel spreadsheets if you want, but I really like the chicken tenders,'' he said. There is now a 'third component' to investment, beyond supply and demand, he claimed, 'which is, 'dude, I don't care if you think it's going to go up or not, or if they have assets or liabilities. I care about this company and I'm going to help it out. I'm going to go buy my jeans from American Eagle.''
