Meme stocks are back from the dead

livemint.com:

retirement plans. There is no clearer evidence of a bull market. Some of the rallies, at a stretch, even make sense.

Redditors view good news as a burst of rocket fuel for share prices. Carvana, which was teetering on the edge of bankruptcy, has averted a crisis by putting up more collateral in exchange for a debt cut. Palantir is riding the AI wave.

A judge in Delaware recently rejected plans to further dilute shareholders in AMC, a cinema chain and one of the early meme stocks. Other rallies are a little more inexplicable. Soon-to-be worthless shares in Bed Bath & Beyond, a defunct retailer, have more than doubled in the past three months.

Tupperware, a struggling home-goods firm, saw its shares jump from 60 cents to more than $4 in late July. Yellow, a bankrupt trucking company, has seen a similar rise in the past few weeks. Is this all down to meme investors? Apes did pivot to buying bankrupt companies after Bed Bath & Beyond’s delisting, with some 25m shares changing hands on the average day in July.

But they are not wholly to blame. Little to no chatter pops up on Reddit in relation to Tupperware or Yellow. Short-sellers may be the true culprits in these instances: they must buy shares sold short to close their positions.

In recent days the bull market has cooled a little. Small shifts in major indices produce enormous swings in meme stocks. On August 7th Yellow’s shares dropped by a quarter; Bed Bath & Beyond’s by 7%.

Investors who bought earlier this year will still be sitting on big profits. Yet they will need to be careful. hodling could risk some legendary losses.