Meme stocks ride on, though investors more cautious than GameStop era

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The phenomenon continues to defy predictions of its demise.

) tumble from highs touched weeks ago, amid a broader selloff in U.S. equity markets, though many are still far higher than they were earlier this year.

A quick rise, often followed by a rapid descent, is a fate common to meme stocks of both the past and present. Analysts at Vanda Research, however, say investors in recent months are putting less money into shares of individual companies and are less likely to stick with their trades than they were in 2021.

Individual investors may still be licking their wounds after a drubbing in markets last year, with the average retail portfolio off between 20% and 25% from its all-time highs, compared to the S&P 500, which is off 8.3% from its 2022 peak, said Marco Iachini, Vanda’s senior vice president. Jonathan Krinsky, chief market technician at BTIG, said the most recent rally in suggested traders had been hunting for “lower quality” stocks they believed could catch up with shares that had already soared.

Still, few have approached the levels of short interest seen in GameStop, which had 170% of its sales sold short in late December 2020, as high demand to short the shares led to the same shares being lent out multiple times.

 

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