Market meme madness has returned
Tupperware? Yellow? Rite Aid? Down on their luck companies have been hot (until they're not) stocks on Wall Street lately thanks to the Reddit crowd. Oh boy.
The names have changed a bit. But it appears that meme investing is still alive (and not well) on Wall Street these days.
Sure, GameStop and AMC may have already had their moment, but the Reddit crowd is now flocking to stocks like Tupperware, the unprofitable plastic container company with little in the way of sales growth, Yellow, a trucking firm that recently shut down its operations and is expected to soon file for bankruptcy, and Rite Aid, the once giant drug store chain that has seen its fortunes dwindle as rivals CVS and Walgreens got bigger and bigger and retail giants Walmart, Target and Amazon bolstered their presence in the pharmacy biz.
The stocks have been incredibly volatile.
Yellow is down today but still up more than 400% in the past week. Tupperware shares have flipped their lid lately, alternately surging and plunging. The stock is now down 10% this week following a huge spike earlier. But shares are still up nearly 300% in the past month. Fans on Reddit, StockTwits and other social media sites tout Tupperware’s appeal as a short squeeze, a stock that can pop because so many investors have bet against it but eventually need to cover their positions and buy back shares they borrowed and then sold short.
This is not investing. This is speculation. Some would even call it gambling. Companies with poor fundamentals are rarely, if ever, good long-term investments. So while traders may look to make a quick buck on these meme stocks, long-term investors need to run away as fast as they can.
The recent performance of some other former meme stock darlings is not pretty. GameStop has plunged nearly 45% in the past year. AMC is down nearly 75% in the last 12 months. Bankrupt Bed Bath & Beyond has lost nearly all of its value.
It likely won’t end well for investors in Tupperware, Yellow and Rite Aid either.