Real reason meme stocks are popping
Starting with Opendoor technologies then came Kohl’s. We saw others like ocean power technologies and Kirkland’s. Starting yesterday and mostly today we got Krispy Kreme and GoPro.
It’s not just the meme stocks though. Some other names are also experiencing minor squeezes from earnings like Thermo fisher and Lamb Weston.
Reason: hedge funds were buying cheap puts as SP500 hit all time highs. Rate cuts are expected, or at least a positive announcement about them in August/September fueling expectations for cheap debt borrowing by companies that have lots of it. These are mostly penny stocks or dying companies that have a lot of short interest. All this together, retail traders are looking for these heavily shorted companies with a good well known name and/or strong narrative to attempt a squeeze.
This environment gives the most control to retail traders out of any envirinment in the stock market. Therefore, while Reddit is full of bots and misinformation, it’s a great place to acquire leads and sentiment on how retail traders are speculating.