Meme stocks are back as investors buy shares of beaten-down companies such as Yellow and Tupperware
A new class of meme stocks has sprung up during the stock market’s surprise recent rally, raising concerns about investors’ willingness to take on bigger risks amid a still uncertain economy
NEW YORK — A new class of meme stocks has sprung up during the stock market's surprise recent rally, raising concerns about investors' willingness to take on bigger risks amid a still uncertain economy.
Meme stocks are typically weak companies on the verge of failing, but that still manage to garner attention from individual investors willing to take on risky bets and drive the stock price higher. Two years ago, the video game retailer GameStop and movie theater operator AMC Entertainment made a big splash with individual investors in a frenzy that caught the attention of regulators and Congress.
The enthusiasm over meme stocks can seem nonsensical. Late last month, reports said the trucking giant Yellow Corp. was shutting its operations and heading for bankruptcy. Investors took the news as a green light to jump in, pushing Yellow's stock from 71 cents to more than $3.50, even though holders of common stock typically get wiped out in a bankruptcy. The company filed a Chapter 11 petition Sunday, yet the shares closed just below $2.50 on Monday.
Tupperware warned investors earlier this year that it was having trouble staying afloat and might be delisted. Investors in recent weeks drove the value of the stock up more than five-fold ahead of a restructuring announcement from the company on Aug. 3. The stock has catapulted to $5.23 from roughly 74 cents in early July.
The recent run-up in meme stocks could leave investors hurting. The broader market seems to be in a transition to focusing on more fundamental aspects of companies that
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