Money Stuff: The Meme Stocks Can't Fail

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Bloomberg 15 July, 2021 - 12:02pm 11 views

What is a meme stock?

Meme stocks are the shares of companies that have seen a recent surge in viral activity, which is usually fuelled by online social media platforms such as Reddit and Twitter. The buzz over a particular stock prompts retail traders to buy the stock with the knowledge that its share price will likely rise. CMC Markets5 Booming Meme Stocks to Watch in 2021

AMC Sees High WallStreetBets Interest Amid Stock Surge; GameStop, Apple, SPY Other Top Trends | Benzinga

Benzinga 15 July, 2021 - 09:49pm

AMC Entertainment Holdings Inc. (NYSE:AMC) is seeing high interest on Reddit’s r/WallStreetBets forum after the movie theatre chain’s stock surged on Thursday, while SPDR S&P 500 ETF Trust (NYSE:SPY) continues to attract the highest interest on the forum.

What Happened: Exchange-traded fund SPDR S& 500 ETF remained the most-discussed stock on the forum with 744 mentions, followed by AMC Entertainment with 386 mentions, data from Quiver Quantitative showed.

Videogame retailer GameStop Corp. (NYSE:GME) and tech giant Apple Inc. (NASDAQ:AAPL) took the third and fourth spots, having attracted 290 and 241 mentions respectively.

The other stocks that trending on the forum include medical insurance technology company Clover Health Investments Corp. (NASDAQ:CLOV), space tourism company Virgin Galactic Holdings Inc. (NYSE:SPCE), online personal finance company SoFi Technologies Inc. (NASDAQ:SOFI), electric vehicle maker Tesla Inc. (TSLA), chipmaker Advanced Micro Devices Inc. (NYSE:AMD) and graphics chipmaker Nvidia Corp. (NASDAQ:NVDA).

Why It Matters: SPDR S&P 500 shares, which saw unusual options activity on Thursday, declined after the benchmark S&P 500 Index closed lower.

AMC Entertainment is seeing high interest from retail investors as the stock rebounded on Thursday after four straight days of losses. The stock is down 50% from its all-time high of $72.62 in June.

Shares of both AMC Entertainment and GameStop are seeing high volatility in recent days.

Apple continues to attract from retail investors ahead of the expected iPhone 13 launch event in September.

Price Action: SPDR S&P 500 ETF Trust shares closed 0.3% lower in Thursday’s regular trading session at $434.75 and further declined 0.2% in the after-hours session to $433.80.

AMC Entertainment shares closed almost 7.7% higher in the regular trading session at $36.00 and further rose almost 6% in the after-hours session to $38.15.

GameStop shares closed almost 0.5% lower in the regular trading session at $166.82, but rose 3.1% in the after-hours session to $172.00.

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A Robot Trader Thinks AMC Will Outperform Facebook and Walmart. Here’s What Else It Bought.

Barron's 15 July, 2021 - 08:30am

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A benchmark-beating exchange-traded fund that is run by a robot expects to see shares in AMC outperform the likes of Facebook and Walmart in July.

The Qraft AI-Enhanced U.S. Large Cap Momentum ETF, trading as AMOM on the New York Stock Exchange, bought shares in AMC —the cinema chain and retail investor favorite—over some of the S&P 500 ‘s largest companies this month. AMOM’s preference for AMC came as another meme stock, GameStop, was booted from its portfolio.

Run by artificial intelligence, AMOM’s rebalancing at the beginning of July was characterized by the removal of major technology and retail stocks, as it pivoted to focus on pandemic trades and reducing volatility.

In June, Facebook, Walmart, Home Depot, Adobe, and Texas Instruments made up a collective 28% of the fund’s holdings, but all five stocks were ditched in its latest rebalancing—meaning that the AI controlling AMOM believes they will see price declines across July.

The standout among the stocks added in July was AMC, the cinema chain that along with GameStop  has epitomized the “meme stock” trading frenzy in 2021.

Also read: Tesla Stock and Volkswagen Should Get Boosted by This Electric-Vehicle Subsidy Extension. Here’s How.

A flock of investors, largely organized on social media platform Reddit, helped squeeze hedge funds’ short positions on companies including GameStop and AMC earlier this year. The trading frenzy caused multibillion-dollar losses for hedge funds, unbelievable gains for individuals that timed it right, and ushered in a new era of internet-inspired trading.

AMC’s stock price rose 570% from January 20 to January 27—from nearly $3 a share to almost $20. Shares in the group are now up close to 1,500% so far in 2021, trading around $33. 

And now the AI calling the shots at AMOM thinks the stock will move even higher in July, buying enough shares to make up 1.8% of the fund. Bringing AMC into the fold came as the robot ditched GameStop, which was added to AMOM in May but booted out after the stock fell more than 14% in June.

“Qraft’s AI model is not specifically designed to invest in meme stocks, but rather in stocks with high capital appreciation potential,” Geeseok Oh, a managing director at Qraft and the head of its Asia-Pacific business, told Barron’s

“AI is not swayed by prejudice or bias and may pick up meme stocks if the momentum seems highly positive,” said Oh. “This month, our model found AMC more opportunistic than other meme stocks like GameStop.”

Plus: The New Mercedes ‘Tesla Fighter’ Lives Up to Its Name

The top five stocks by portfolio weight added to AMOM in July include retailer O’Reilly Auto Parts, software group Cadence Design Systems,  electronics store chain Best Buy,  biotech cancer specialist Seagen,  and enterprise software developer HubSpot.

After the fund was rebalanced, AMOM’s five largest holdings by portfolio weight were online dating group Match,  cybersecurity company Fortinet,  O’Reilly Auto Parts as well as rival AutoZone,  and retailer Kroger.

“With Covid-19 reaching new peaks, the AI made trades related to the pandemic conditions,” Oh said. “ Match is one of the beneficiaries of the pandemic with more people trying out online dating. Fortinet stock gained prominence with more and more governments emphasizing the importance of cybersecurity.”

Oh also added that it was noteworthy that AMOM has decided to adjust its portfolio away from very big bets—in June, the fund’s top three stocks accounted for 21% of the portfolio, but now the top three stocks account for just 11%.

“Given the volatile market sentiment, the AI seems to have adjusted portfolio and concentration to hedge against potential risks,” he said.

More: Elon Musk Blames Tesla Price Hikes on a Critical Parts Shortage. Will His Fix Work?

AMOM has been listed in New York since May 2019, and has delivered total returns of 12% so far in 2021 and 42% in the past year—outpacing its benchmark, the S&P 500 Momentum index, which has climbed a comparable 34% since July 2020.

The fund is a product of Qraft, a Seoul, South Korea-based fintech group leveraging AI across its investment products, which include three other AI-picked versions of major indexes: a U.S. large cap index QRFT ; a U.S. large cap dividend index HDIV ; and a U.S. value index NVQ.

AMOM is an actively managed portfolio driven by artificial intelligence, tracking 50 large-cap U.S. stocks and reweighting its holdings each month. It is based on a momentum strategy, with the AI behind its stock picks capitalizing on the movements of existing market trends to inform the decision to add, remove, or reweight holdings. The artificial intelligence scans the market and uses its predictive power to analyze a wide set of patterns that show stock-market momentum.

The entrance of AI-run funds onto Wall Street promised a new high-tech future for investing, though it hasn’t quite lived up to the hype yet. Theoretically, researchers have shown that AI investing strategies can beat the market by up to 40% on an annualized basis, when tested against historical data.

But Vasant Dhar, a professor at New York University’s Stern School of Business and the founder of machine-learning-based hedge fund SCT Capital Management, argued in June 2020 that AI-run funds won’t “crack” the code of the stock market.

Advocating caution, Dhar said that it was difficult for funds underpinned by machine learning to maintain a sustainable edge over markets, which have “a nonstationary and adversarial nature.” He advised investors considering an AI system to ask tough questions, including how likely it is that the AI’s “edge” will persist into the future, and what the inherent uncertainties and range of performance outcomes for the fund are.

A benchmark-beating exchange-traded fund that is run by a robot expects to see shares in AMC outperform the likes of Facebook and Walmart in July.

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AMC, GameStop Swing as Meme Stocks Run Out of Air

The Wall Street Journal 15 July, 2021 - 08:16am

Shares in AMC rose nearly 8%, erasing losses from earlier in the day, when it fell almost 6% in premarket trading. The stock has retreated over 20% so far this week, making it one of the biggest losers as a red-hot rally in meme stocks began to fizzle out. GameStop edged down less than 1% on Thursday, extending a premarket decline and putting its loss for this week at almost 13%.

Other big losers include Clover Health Investments Corp., a company that rocketed up over 85% in a single day in June and has lost 38% in July. Its price was below $8 a share in mid May before shooting up to over $22, and shares traded Thursday at less than $9 apiece.

The precipitous downward trajectory for shares championed by individual investors on social media and in online forums underscores the fragility of the market for these small stocks. Retail trading has become a force in markets this year, as the combination of stay-at-home orders and the proliferation of free trading apps brought many people into stocks and options for the first time.

Coordinated trades on Reddit forums, with buyers encouraging each other to plow money into certain stocks, helped GameStop shoot up over 750% this year, while AMC is up more than 1500%. At the start of the year, GameStop was trading at less than $20 apiece, while AMC was priced at roughly $2. In comparison, the broader S&P 500 index has risen just over 16%.

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AMC Stock: A Few Reasons To Keep Holding

TheStreet 15 July, 2021 - 05:15am

Wall Street Memes talks about some of the reasons why the Reddit crowd has remained bullish on AMC stock, despite unfavorable price action.

(Read more from Wall Street Memes: AMC Stock: A Test For Diamond Hands)

According to Ortex data, AMC shares have a short interest of 16% at last check. That is, nearly one-fifth of AMC shares are currently shorted in the market. The ratio has climbed to as much as 19% recently. Such high figures keep the stock a potential target for a short squeeze.

For reference, Tesla’s short interest breached 20% in May 2019 – before the ratio began to decline sharply towards the low teens and share price skyrocketed by 150% through January 2020.

The utilization rate is based on borrowed shares divided by the shares investors are willing to lend. The closer the utilization gets to 100%, the greater the risk for short sellers. If the short trade is overly crowded, bears can suffer in the case of a sudden buying spree.

AMC’s utilization rate of almost 93% (data from Ortex) indicates that there is substantial demand for short selling. AMC utilization numbers have increased by more than six percentage points since the beginning of July, which may help to explain the drop in AMC share prices – but may also suggest overcrowding.

Unlike other stocks that have emerged since GameStop  (GME) - Get Report started meme mania, AMC, GME itself and only a few other names have stood out for loyal and fervent following. FOMO and YOLO have been drivers of increased demand for a stock like AMC within the Reddit community.

AMC does not fit one-off meme cases like Newegg  (NEGG) - Get Report, a stock that was speculated to have spiked (and tanked) recently as an ultra-short term bullish target. Apes are more likely to “diamond-hand” their positions in AMC, keeping the short squeeze potential alive for longer.

Having said the above, it is also important to point out that trading AMC comes with sizable risks. Diamond-hand apes and casual paper-hand traders are entitled to their bullishness (i.e. hope for the best). But they should also be prepared for the worst (i.e. volatility and large losses, whether temporary or not).

AMC's historical volatility has surpassed 180% in a 52-week period, almost ten times the market’s. Even a Big Tech name like Apple (AAPL) has experienced volatility of only 34%. Therefore, based on history, it is not unreasonable to expect AMC to go up 100% or much more, or to drop to nearly zero.

Case in point, AMC fell more than 70% in the months following the first short squeeze, in January 2021, recovering quickly in June, after the second short squeeze. The journey to the moon has clearly not been a straight shot up, and apes should not expect it to be so going forward.

Apes and other AMC shareholders: in your opinion, which of the below would be most important for a potential short squeeze in AMC to happen?

S&P 500 Gets Highest WallStreetBets Interest; AMC, GameStop, Apple Other Top Trends

Markets Insider 14 July, 2021 - 11:10pm

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SPDR S&P 500 ETF Trust (NYSE:SPY) continues to see the highest interest on Reddit’s r/WallStreetBets forum as of Wednesday night, while AMC Entertainment Holdings Inc. (NYSE:AMC), Apple Inc. (NASDAQ:AAPL), and GameStop Corp. (NYSE:GME) also attracted attention.

What Happened: Exchange-traded fund SPDR S& 500 ETF remained the most-discussed stock on the forum with 774 mentions, followed by movie theatre chain AMC Entertainment with 486 mentions during the last 24 hours at press time, data from Quiver Quantitative showed.

Tech giant Apple and videogame retailer GameStop took the third and fourth spots, having attracted 335 and 334 mentions respectively.

The other stocks that trending on the forum include space tourism company Virgin Galactic Holdings Inc. (NYSE:SPCE), medical insurance technology company Clover Health Investments Corp. (NASDAQ:CLOV) and smart materials and photonics company Meta Materials Inc. (NASDAQ:MMAT).

Why It Matters: SPDR S&P 500 shares, which saw unusual options activity on Wednesday, hit an intraday record earlier in Wednesday’s session after the benchmark S&P 500 Index also rose.

Apple’s shares also hit an intraday record earlier in the day after it was reported that JPMorgan analyst Samik Chatterjee added the stock to the firm's analyst focus list as a growth idea.

Virgin Galactic’s shares extended losses to a fourth day on Wednesday after the company took advantage of its previously elevated stock price to file a $500 million shelf offering of common stock earlier in the week.

AMC Entertainment shares closed more than 15% lower in the regular trading session at $33.43 and further declined 3.5% in the after-hours session to $32.25.

Apple shares closed 2.4% higher in the regular trading session at $149.15 and further rose 0.2% in the after-hours session to $149.49.

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