What was once a blip on the radar that many analysts viewed as a passing fad became one of the most consequential developments on Wall Street. I speak of course of the phenomenon that is meme stocks, loosely defined as publicly traded securities that have an incredible following on various social media platforms. But while we might squabble over its exact description, their influence is no longer deniable.
At first, meme stocks carried a definite moral directive. Most commonly, the children of many parents witnessed first hand the destruction of wealth and personal security which the 2008 financial collapse. In turn, the ensuing Great Recession caused, in adulthood, this aggrieved generation to seem out to get some payback. And what sweet revenge they extracted, deliberately bidding up heavily shorted securities to blow up short traders’ accounts.
Later, the movement sought out other long-side opportunities, ranging from electric vehicles (EVs) to “botanical” products and anything and everything in between. But what might surprise casual observers is that meme stocks don’t necessarily involve exclusively speculative investments. Indeed, some of the most popular memes have involved blue chips or well-established companies. So, if there’s anything to be encouraged about with this movement, it’s that it’s not entirely speculative.
Furthermore, I’ll give credit where it’s due. Investing tends to be a rather clinical affair. But the way that meme traders approach the market delivers a camaraderie and joviality that you don’t find in other forums. That’s not to say that toxicity in the space doesn’t exist because it clearly does. However, with so many financial analysts bemoaning the dearth of investing activity among millennials, meme stocks may have provided a viable solution.
Overall, since the topic has been a much-covered one for approximately the trailing year-and-a-half period, you’ve likely heard about the most popular memes. This story isn’t about those companies. Instead, we’re going to explore the meme stocks that have gained significant popularity in recent weeks.
- Beyond Meat (NASDAQ:BYND)
- SmileDirectClub (NASDAQ:SDC)
- Bed Bath & Beyond (NASDAQ:BBBY)
- Avis Budget Group (NASDAQ:CAR)
- Apple (NASDAQ:AAPL)
- Meta Platforms (NASDAQ:FB)
- Digital World Acquisition Corp (NASDAQ:DWAC)
Please note that this list isn’t necessarily a green light to acquire the securities above. With some analysts going so far as to say that meme stocks will just keep rising, there’s a high chance that the movement has jumped the shark. Still, memes thrive on community and the power of the internet. But if you’re feeling lucky, you could decide to throw some loose change into the mix.
Hot Meme Stocks: Beyond Meat (BYND)
On a personal level, Beyond Meat reminds me of the plastic bag floating in the breeze as you’re crossing by on the freeway. Even when you switch lanes to avoid it, you could swear that the bag is floating toward you, as if it’s destiny that it should entangle itself with your car.
I mention this because at first, I wasn’t exactly sold on the idea of plant-based protein. For one thing, the ingredients may not sit well with everyone. Second, the cost of “fake meat” is prohibitively high. I mean, why pay more for the fake stuff? Yet, Beyond Meat consistently proved me wrong.
Now that I’ve tried Beyond products multiple times, I can appreciate the enthusiasm. But no sooner had I begun my redemptive journey, BYND stock began bleeding in the market. On a year-to-date (YTD) basis, shares are down about 33%.
Nevertheless, BYND stock has made a comeback in terms of popularity on various social media channels. In 2020, Beyond’s revenue hit $406.8 million, up nearly 37% from 2019’s tally as restaurant closers and the food supply chain disruption caused people to switch to plant-based proteins. It’s also still maintaining momentum this year, which bodes well for BYND stock as one of the more credible meme stocks.
SmileDirectClub (SDC)
As Americans, we have a reputation to keep. One of the biggest tells that someone is from the United States is straight teeth. Now, I’m not about to drop a joke about British dentistry standards. Because honestly, I can’t think of another country which prioritizes teeth — their whiteness and aesthetics — than the U.S.
However, braces are a pain. And if you play a brass instrument, I mean that literally. Fortunately, for many patients, they’re eligible for less intrusive solutions, which brings us to the SmileDirectClub. An easier and affordable way to straighten, whiten and clean your teeth, SmileDirectClub’s sculpting mechanism allows patients to correct their teeth without the traditional hassles of monthly orthodontist’s visits.
As you might expect, though, SDC took a beating in 2020 because of the novel coronavirus pandemic. Between 2017 through 2019, the company was enjoying an incredibly robust growth trek. However, the SARS-CoV-2 virus stopped that momentum cold, with last year’s revenue of $656.8 million down 12.5% against the prior year.
Still, as meme stocks go, bad news spells a long-side opportunity. At least, that’s the rationale behind SDC’s recent sentiment spike.
Hot Meme Stocks: Bed Bath & Beyond (BBBY)
If you look at Wells Fargo’s analysis of Bed Bath & Beyond, you’re not going to find too much sympathy for this struggling retail play turned into one of the more inexplicable meme stocks. The banking giant reiterated its “underweight” rating, stating that BBBY “shares have temporarily disconnected from economic reality.”
That’s one way of putting it.
Of course, BBBY generated somewhat justifiable interest when management announced a partnership with supermarket behemoth Kroger (NYSE:KR). Per a CNN report, Bed Bath “will sell some of its bedding, storage and baby furniture” at select Kroger-branded stores beginning next year. It’s an intriguing move given that the company is attempting a turnaround. Still, it seems disjoined and rather desperate.
Wells Fargo added that while the partnership could prove interesting one day, “details today are thin, there is no proof of concept, and we ultimately view the announcement as noise to overshadow an otherwise challenged fundamental outlook.”
Maybe. But proponents of meme stocks love a great challenge. As well, BBBY stock’s 62% rise since the beginning of the month suggests that there’s real money to be made for those willing to stomach potential volatility.
Avis Budget Group (CAR)
Early last year, some analysts were writing the obituary of rental car companies like Avis Budget Group and for good reason. While nobody likes a negative Nancy, the coronavirus pandemic utterly disrupted the airline industry. And without this critical upwind demand structure, Avis couldn’t receive the downwind benefits that usually stem from a steady flow of tourists. Frankly, the pandemic was the perfect negative catalyst.
In 2020, the company posted revenue of $5.4 billion, a staggering 41% loss from the prior year’s total. As well, net loss slipped to $684 million last year, a desperately unfavorable comparison to the net income of $302 million posted in 2019. Clearly, Avis was on life support and nothing short of a miracle would get the rental car firm out of its funk.
Well, that miracle came in the form of an unprecedented vaccine rollout combined with an incredible response from the economy. With a strong showing in both the top and bottom line in the third quarter, Avis appeared back in business. Indeed, the New York Times featured CAR — along with Bed Bath & Beyond — as one of the meme stocks to watch.
Hot Meme Stocks: Apple (AAPL)
I don’t get to talk much about Apple in terms of single-stock coverage, mainly because popular developments such as meme stocks have captured most of the media’s attention. However, I’m talking about the consumer technology giant here because it too has become part of the meme community. And as with other social-media-driven names, the name isn’t without justification. Per Stocknews.com:
“[In October], AAPL launched two powerful chips–M1Pro and M1Max. These new chips are expected to transform systems into pro-system with incredible performances, custom technologies, and industry-leading power efficiency. M1Pro and M1Max also include an Apple-designed media engine that should accelerate video processing while maximizing battery life.”
Additionally, the introduction of the company’s iPhone 13 should provide the tech firm a nice lift. As Cnet.com noted, the “iPhone 13 and iPhone 13 Mini aren’t radically different, but that’s part of the charm.” Essentially, Apple is giving its customers familiarity and rapid uptake of the interface while dropping some gold nuggets.
Furthermore, it’s impossible to stop this company, with Apple posting gargantuan sales of nearly $366 billion in the fiscal year ended Sep. 30, 2021. That said, it’s one of the meme stocks that’s not going to make you rich — but it will likely keep you afloat.
Meta Platforms (FB)
Having had zero time for social media over the past few years, I was taken by surprise when the company formerly known as Facebook changed its brand identity to Meta Platforms. CEO Mark Zuckerberg explained that the name change reflects the company’s burgeoning focus on the “metaverse” vision.
For those who simply don’t give a hoot about the esoteric rumblings of an eccentric billionaire, the Wall Street Journal defines the metaverse as an “extensive online world where people interact via digital avatars.” While the concept sounds utterly silly to me, with a virtualized world, users can experience an immersive three-dimensional interface. It has strong implications for video games and entertainment content.
Moreover, Zuckerberg is intent on making this transition stick. “From now on we are going to be Metaverse first, not Facebook,” he stated during a keynote address at the now Meta Platforms’ annual developer’s conference.
Personally, I think the company will be better off with a Facebook-first approach given its massive size and utility. However, from an investment perspective, I can get behind the pivot to the metaverse. Again, it might be crazy to me but Zuckerberg has his finger on society’s plus, thus making rebranded FB one of the more popular meme stocks to consider.
Hot Meme Stocks: Digital World Acquisition Corp (DWAC)
Usually, special purpose acquisition companies (SPACs) attract attention because of their relative novelty and frankly, underperformance overall. There’s also a debate about whether they actually benefit retail investors. Yes, they open new opportunities for regular folks, but because of their dilutive structure, they can devastate rookie investors who failed to perform due diligence.
But now, a SPAC may have presidential consequences, which brings us to the final name on this list of recently popular meme stocks, Digital World Acquisition Corp. The blank-check firm that will take Trump Media & Technology Group public has attracted eyeballs for the underlying marquee asset: Truth Social or the social media platform that will take on big tech censorship.
Bluntly speaking, you got to read between the lines. Big tech censors speech on its platforms because advertisers don’t want to be associated with controversial content. So when Truth Social promotes its anti-censorship protocol, it seems to suggest that it has zero problems with this type of content.
On the surface, that might be a problem. However, like a twisted version of Star Wars, former President Donald Trump’s 2020 defeat has only made him stronger. Thus, I would not ignore the very real potential behind DWAC stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.