Dorks Are Trending This Week
This week’s spotlight is on Dorks. With record-high inventory levels, a fresh wave of meme stocks has caught the interest of retail traders. The classic favorites, GameStop and AMC, seem to be taking a backseat to new contenders.
The term “Dorks” has emerged, referring to a mix of companies like Krispy Kreme, Opendoor, Rocket Lab, and Kohl’s. These stocks have seen notable activity lately.
It feels a bit like the frenzy of 2021. From the rise of cryptocurrencies to pandemic-related SPACs, and even struggling financial firms, there’s a theme of pushing stocks into the stratosphere.
Interestingly, proposed laws aiming to ease daily trading restrictions—by lowering margin account thresholds—haven’t really been favorable for retail investors lately.
However, there’s a distinct difference between the current rally and the earlier hype. “This surge owes itself to advancements in trading tech, broader leverage use, and a booming options market. The recent crypto market profits have built some trust among retail investors,” shared market strategists. They noted that while this uptick reflects a higher risk appetite, it remains somewhat contained and hasn’t yet rattled the overall stability of the market.
The investment scene can get a bit greedy, reminiscent of Warren Buffett’s cautionary tales.
Tony Desphilito, BlackRock’s US equity chief, has observed bubbles forming as market sentiment keeps rising while meme stocks surge. He pinpointed stocks that are overvalued yet show minimal growth as a red flag.
He cautions, “Meme stocks are the essence of greed. If I were to advise people, I’d recommend steering clear of them and instead seek out companies with solid cash flow and earnings.”
Recent Movements in Meme Stocks
Opendoor Technologies
Just last week, Opendoor was teetering on the brink, facing potential delisting from Nasdaq. Hedge fund manager Eric Jackson expressed immense enthusiasm for Opendoor, projecting a price target of $82. This excitement has revitalized retail traders.
The stock skyrocketed over 440% last month, advancing from below $1 to about $2.88, even reaching $4.71 briefly this Monday. Yet, it faced a 28% drop on Wednesday.
Kohl’s Corporation
Kohl’s saw its shares surge by 38% on Tuesday. This wasn’t just driven by the company’s news; there’s active chatter on R/WallStreetBets. The retailer’s stock has a high short interest, making it a prime candidate for a short squeeze.
Trading of Kohl’s stock was temporarily halted during the frenzy.
Krispy Kreme
The donut chain experienced a 28% spike on Tuesday. After starting trading nearly two years ago around $10, the stock fell after disappointing revenue reports, but it has bounced back this week.
The shares continued to rise on Wednesday, drawing attention as another target for Reddit’s short squeezers, with short interest levels hitting 33%.
Rocket Lab
Rocket Lab’s stock has gained traction, fueled by growing retail interest in the space sector. The firm, which provides comprehensive space services, stands as a competitor to SpaceX.
Just last month, the stock jumped by nearly 50%, driven by upcoming government contracts and launches, witnessing about a 100% increase since the year began. Approximately 13% of the stock’s float is shorted.
GoPro
GoPro has also gotten caught up in the meme stock wave. Back in 2015, its shares were valued at $67. Recently, a surge in retail buying jettisoned the stock from under $1 to over $2 shortly after Wednesday’s opening, marking a 72% rise before settling around 40%.
About 10% of GoPro’s shares are currently shorted.
