The meme stock craze that started during the pandemic is still influencing the movement of shares in major U.S. corporations. Keith Gill, also known as Roaring Kitty, recently announced that he has sold off his entire stake in the online pet supply retailer Chewy, causing the company’s shares to slump. Gill had acquired 6.6% of Chewy’s shares back in July, sparking interest among retail investors. He gained popularity in 2021 when he rallied investors around GameStop, a struggling video game retailer that was being targeted by big Wall Street hedge funds.
Ryan Cohen, the founder of Chewy, also has ties to GameStop as he became the CEO of the company. Other meme stocks have emerged since then, with Trump Media & Technology Group Corp. gaining attention in the market. The value of Trump Media recently surpassed Elon Musk’s social media platform X due to volatile trading and its use of the ticker symbol “DJT.” Meme stocks, driven by momentum and investor enthusiasm, have become a reality in today’s market, with shares of Trump Media doubling in value in 2024 despite rising losses and increasing debt.
Gill’s decision to liquidate his stake in Chewy has put pressure on the company’s shares, as he was once its third-largest stakeholder. His hints on social media platform X about potential investments were closely watched by investors. While Chewy has been performing well, beating Wall Street earnings expectations and seeing revenue growth, its shares are only up 13% this year. With the environment for meme stocks changing and more shares available for trading, the likelihood of short squeezes, which can lead to significant profits for investors, has decreased.
The risks of investing in meme stocks like Trump Media include the volatility of share prices and the need for constant monitoring. Shares of Trump Media have fluctuated significantly, with gains one week followed by losses the next. While the stock is up 130% this year, analysts caution against investing based solely on momentum and suggest considering economic fundamentals before making a decision. The rise and fall of meme stocks like Trump Media are tied to factors beyond traditional metrics, making them a risky investment for those who choose to participate in the trend.
In conclusion, the meme stock craze continues to impact the market, with influencers like Keith Gill playing a significant role in driving investor interest. Companies like GameStop and Chewy have been at the center of this movement, with their fortunes tied to the enthusiasm of retail investors. While meme stocks offer the potential for quick gains, they also come with high levels of risk and uncertainty. As the market landscape evolves, investors must carefully consider the factors driving meme stocks and the potential consequences of joining in on the trend.
