The Wall Street Memes channel follows closely the movements of Roundhill Investment’s Meme ETF (MEME). In a week marked by the sudden spike in GME and AMC stocks, this fund helps to identify other potential meme stories unfolding under most investors’ radars.
Today, we review MEME’s top holdings. Could at least one of them be ripe for a rally?
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GME and AMC: meme revival
GameStop stock (GME) - Get GameStop Corporation Report has been the star of the show in the past few days. Between Monday, March 14, and only seven trading days later, GME shares ripped higher by an astounding 80%. It takes a solid five years or so for the average stock to move this much.
GameStop became the most popular stock on Reddit for a few days, outpacing its peer AMC stock (AMC) - Get AMC Entertainment Holdings Inc. Class A Report in mentions by a factor of 10 times and in upvotes, by 70 times.
Arguably, GME shares have moved in the past couple of years not on business-related developments, but almost purely on retail investors’ enthusiasm. It is not a surprise that increased popularity has led the stock price to jump as it did in the past few days.
It is also not a surprise, for the same reason, that GME and AMC are currently the top two holdings in Roundhill’s Meme ETF. Combined, both account for 10% of the holdings. See below.
Not all about GME and AMC
However, as the pie chart above also depicts, “meme mania” is not all about GME and AMC. In fact, 90% of Roundhill’s Meme ETF is allocated to 23 other names, some of which have also been on a tear lately.
DocuSign stock (DOCU) - Get DocuSign Inc. Report is one example. Shares have been up 17% in the past five trading days alone. While the stock reached the stratosphere in mid-2021, propelled by low interest rates and the remote work theme, DOCU is now in a steep drawdown of 70% from the peak.
Another stock that has been doing quite well lately after having a terrible start to 2022 is EV maker Nio (NIO) - Get NIO Inc. American depositary shares each representing one Class A 蔚来汽车 Report. While electric vehicles and other disruptive technologies have been looking for a bottom in the market, NIO has also benefited from a rebound in battered Chinese stocks.
This is how we have recently summarized our views on this particular stock:
“An investment in Nio is risky due to external factors beyond the company's control. The company's fundamentals seem to hold good prospects for capitalizing on the emerging EV market based on its technology and especially its Chinese market penetration.”
The eighth largest holding in the Meme ETF today is Clover (CLOV) - Get Clover Health Investments Corp. Report, a stock that we have covered a few times on the channel. Share price has been down a whopping 55% in the past year. But traders that timed this one right have benefited from an 82% spike in the last 30 days.
Worth noting, momentum is not an exclusivity of tech and growth stocks. Recently, even the industrial space has gained popularity, especially in the oil and gas sector.
A few examples here include offshore driller Transocean (RIG) - Get Transocean Ltd (Switzerland) Report and steel producer Cleveland-Cliffs (CLF) - Get Cleveland-Cliffs Inc. Report. The latter found a 52-week low as recently as late January, but has doubled in value since then. Talk about a classic meme-style rally in an inconspicuous stock.
Not all stocks with “meme potential” are GameStop and AMC — although these two have been ripping higher in the past days. Among the most popular stocks, which pair below do you think has the most upside potential from here?
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)