NEW YORK — A new class of meme stocks has sprung up during the stock market’s surprise recent rally, raising concerns about investors’ willingness to take on bigger risks amid a still uncertain economy.
The enthusiasm over meme stocks can seem nonsensical. Late last month, reports said the trucking giant Yellow Corp. was shutting its operations and heading for bankruptcy. Investors took the news as a green light to jump in, pushing Yellow’s stock from 71 cents to more than $3.50, even though holders of common stock typically get wiped out in a bankruptcy. The earlier this year that it was having trouble staying afloat and might be delisted.
“You just kind of run out of steam and there’s only so much an aggressive retail investor can do to sustain a company from a disadvantaged perspective,” he said. “That’s going to leave some companies in the dust.”
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