Move Over AMC, Make Way for This New Wave of 7 Favorite Meme Stocks
Meme stocks are among the hottest topics on Wall Street. As a result, such shares have seen a significant surge in trading activity, often fueled by social media platforms like Reddit and Twitter (NYSE:TWTR). And because the prices of meme stocks tend to skyrocket in a matter of sessions, the mouthwatering returns seem to attract more and more risk takers by the day.
For instance, AMC Entertainment Holdings (NYSE:AMC) boasts a year-to-date (YTD) gain of about 2,650%, soaring as much as 561% in January alone. Therefore, today’s article discusses seven stocks that may gain traction on social media soon and become meme stocks as well.
Right now, retail investors seem eager to boost their favorite meme stocks after realizing the magnitude of their collective power. They usually target stocks with significant short interest to squeeze institutional investors into covering their short positions.
According to S3 Partners data, investors searching for meme stock candidates may find over 2,000 firms with a market cap of at least $100 million and short interest of 15% or more. Therefore, we could be looking at a retail investor crusade with considerable impact on the stock market.
While these rallies can generate lucrative returns in a short period, most meme stocks are highly volatile. They are valued for their social media popularity rather than their financial performance. Therefore, investors should exercise caution as such shares would not be suitable for all portfolios.
With that information, we have identified seven firms poised to build up meme stock status in the near term:
- Arrival (NASDAQ:ARVL)
- Clean Energy Fuels (NASDAQ:CLNE)
- Koss (NASDAQ:KOSS)
- Pitney Bowes (NYSE:PBI)
- Rocket Companies (NYSE:RKT)
- UWM Holdings (NYSE:UWMC)
- Zynga (NASDAQ:ZNGA)
Meme Stocks to Watch: Arrival (ARVL)
52-week range: $9.80 – $37.18
British electric vehicle (EV) manufacturer Arrival went public in March after merging with with CIIG Merger Corp, a special purpose acquisition company (SPAC). Arrival is a pre-revenue business focusing on the production of commercial electric vehicle vans and buses.
The group claims to be reinventing the automotive industry with its unique approach to building micro-factories near potential customers in metro areas. For instance, the first U.S. micro-factory, in York County, South Carolina, is scheduled to produce electric buses from the fourth quarter of 2021. “The talk is of 1,000 battery buses per year,” Electrive.com reported.
Arrival announced Q1 financial results on May 13. Adjusted EBITDA loss was 27 million EUR ($32.3 million) compared to 14 million EUR in the prior-year period. Adjusted loss per share was 16 cents EUR. Cash and equivalents ended the first quarter at 516 million EUR.
The current capital expenditure projection stands at $50 million. Management noted the second U.S. micro-factory will be built in Charlotte, North Carolina and the first European van micro-factory will be located in Spain.
“We are fully focused on executing our business plan to bring our microfactories to multiple cities and markets to serve their communities and accelerate the transition to zero-emission transportation. We continue to expect to have four vehicles — the bus, van, large van, and car — on the market by the end of 2023,” said CEO Denis Sverdlov in the earnings update.
The EV group plans to start production of the “Arrival Bus” by Q4. Public road trials of its bus are expected to begin this fall with First Bus, one of the U.K.’s largest transport operators.
Meme stock communities noticed that about 7% of Arrival’s public share float was sold short, as of May 28. ARVL stock jumped more than 15% in mid-June due to the social media frenzy by Reddit users. The share price currently hovers around $18, down 36% YTD.
Clean Energy Fuels (CLNE)
52-week range: $2.01 – $19.79
Newport Beach, California-based Clean Energy Fuels is natural gas marketer and retailer in the U.S. and Canada. The company delivers renewable natural gas (RNG) via liquefied natural gas (LNG) and compressed natural gas (CNG) to its network of fueling stations. In addition, it builds LNG and CNG fueling stations for the transportation market, operating a network of 570 stations in both countries.
The company announced Q1 results in early May. Total revenue fell 10.3% year-over-year (YoY) to $77.1 million. Net loss was $7.2 million in the first quarter. Non-GAAP loss per share remained flat YoY at 1 cent. Cash and equivalents stood at $117 million at the end of the quarter.
CEO Andrew J. Littlefair expressed his satisfaction with the results despite the ongoing effects of the pandemic. Clean Energy Fuels seems well aligned with the Biden administration’s plans to reduce the country’s carbon emissions over the next decade. In addition, CLNE signed a five-year agreement with Amazon (NASDAQ:AMZN) to provide RNG at 27 of its existing fueling stations and another 19 in the near future.
The stock soared by more than 30% on June 8 as a new meme stock candidate before plunging 15% on the next day. CLNE stock currently trades at $11.80 territory, up almost 50% YTD. On a a price-to-sales (P/S) basis, shares currently trade at 8.29x.
Koss (KOSS)
52-week range: $1.32 – $127.45
Milwaukee, Wisconsin-based Koss manufactures and sells stereo headphones, wireless Bluetooth speakers, telecommunications headsets, and related accessories. Its history goes back to the 1950’s.
In mid-May, the company released Q3 metrics for the quarter ended March 31. Revenue was $4 million, a 17% decrease from the prior-year period. Net loss increased to $474,168 compared to $97,373 last year. Diluted loss per share was 6 cents compared to 1 cent a year ago.
“The business has shifted away from a concentration in mass market retailers to more consumer direct, specialty and distributor based channels. The net decline in the quarter’s sales revenue can largely be attributed to the sporadic service disruptions of freight carriers.” remarked CEO Michael J. Koss.
KOSS stock started 2021 with a 480% surge on January 27 before plunging back over the next three days. The meme stock jumped again on June 2 by almost 70% before entering a corrective decline. The shares currently hover around $23, up more than 550% YTD, and trade at 11.81 times sales.
Pitney Bowes (PBI)
52-week range: $16.22 – $41.10
Stamford, Connecticut-based Pitney Bowes offers mailing and commerce solutions that also include cross-border e-commerce logistics as well as analytics. Clients worldwide include 90% of the Fortune 500 businesses.
Pitney Bowes announced Q1 results in early May. Revenue of $915 million represented a 15% YoY growth. However, the bottom line remained in the red. Net loss was $31.6 million. Adjusted earnings per share (EPS) was 7 cents, up from 5 cents in the prior-year quarter. Cash and equivalents came at $681 million.
CEO Marc B. Lautenbach remarked, “Revenue continued to demonstrate strong growth, every business improved its EBIT performance from the prior year, and we strengthened our balance sheet.”
PBI stock soared 51% in January, as the company found itself caught up in the short squeeze craze. However, the stock later plunged in early February despite having just announced surprisingly strong sales results. PBI stock currently hovers slightly above $8, up almost 32% YTD.
Pitney Bowes expects annual revenue to grow in the low-to-mid single-digit range during 2021. Its forward P/E and current P/S ratios stand at 23.15 and 0.38, respectively.
Rocket Companies (RKT)
52-week range: $16.22 – $41.10
Detroit, Michigan-based Rocket is the parent company of Rocket Mortgage, formerly known as Quicken Loans. The financial services group consists of tech-driven real estate, mortgage, and e-commerce businesses. In addition to Rocket Mortgage, the largest mortgage lender stateside, the company has expanded to complementary industries, such as real estate services, auto sales and personal lending. The company went public in August 2020.
In mid-May, Rocket released its Q1 2021 figures. Top line for the first quarter was $4.6 billion indicating 236% YoY growth. The company has profited generously from low interest rates. Net earnings surged by 28x and stood at $2.8 billion. Adjusted diluted EPS was 89 cents. Closed loan origination volume of $103.5 billion and net rate lock volume of $95.1 billion represented 100% and 70% YoY improvement, respectively.
CEO Jay Farner stated, “This was the sixth consecutive quarter where our team was able to double the company’s home loan volume year-over-year.”
Despite an impressive performance, this is one meme stock that does not trade at an astronomical valuation. Analysts have been debating whether the shares should be priced as a consumer or financial company rather than a technology platform as the company would like to increasingly promote itself.
Reddit group r/WallStreetBets noticed significant short interest in the company and pushed the stock price up to almost $42 in early March. RKT stock currently hovers around $19.50 territory, down nearly 4% YTD.
The mortgage refinancing market is expected to slow in 2021. Investors are increasingly worried about a potential increase in interest rates given the recent update from the Fed. RKT stock’s forward P/E and current P/B ratios stand at 9.00 and 4.78, respectively.
UWM Holdings (UWMC)
52-week range: $6.25 – $14.38
Dividend yield: 4.20%
Pontiac, Michigan-based UWM Holdings is the publicly traded indirect parent of United Wholesale Mortgage (UWM), a leading wholesale lender stateside. It underwrites and provides closing documentation for residential mortgage loans originated by independent mortgage brokers, correspondents, small banks, and local credit unions.
UWMC announced Q1 earnings in early May. Revenue increased more than 160% YoY to $1.2 billion. Net earnings stood at $48 million, or 33 cents per share. Loan volume originations were $49.1 billion, representing a 16% YoY increase from the prior-year quarter. The total gain margin was 219 basis points (bps) in the first quarter compared to 95 bps in the prior-year quarter.
CEO Mat Ishbia said, “The first quarter of 2021 was not only the best first quarter in our 35-year history, it also marked our first quarter as a public company and solidified our foundation for growth.”
The period of easy refinancing activity that began with the pandemic seems to be slowing down along with rising interest rates. Analysts are concerned that the next several quarters could therefore be difficult for the whole industry.
UWMC stock surged more than 10% on June 9 due to attention from the meme stock community on Reddit. The stock currently trades at $9.50 territory, down more than 27% YTD. The shares are trading at 8.06x their book value.
Zynga (ZNGA)
52-week range: $7.77 – $12.32
San Francisco, California-based gaming group Zynga develops and markets games played on mobile platforms and social media platforms like Facebook (NASDAQ:FB). The company generates revenue through mobile game downloads, in-game sales of virtual goods, and advertising services.
Recent years have seen impressive growth in the video game space, in part driven by mobile games. Metrics suggest that the industry will be worth :$200 Billion by 2023. The biggest areas of growth are in Latin America and APAC, ” or Asia-Pacific, led by China.
Zynga announced Q1 numbers in early May. Total revenue was $680 million, up 68.4% YoY. However, the bottom line remained in the red with a $23 million loss. Diluted loss per share was 2 cents for the quarter. Cash and equivalents ended Q1 at $700 million.
CEO Frank Gibeau said, “We are off to an excellent start in 2021, delivering record Q1 results ahead of guidance and generating strong momentum across all aspects of our growth strategy. Our tremendous quarterly revenue and bookings were driven by breakout performances from our live services, new games, and hyper-casual portfolio.”
The Street highlights that ZNGA stock boasts growth drivers such as international growth and multiplatform games. Surging sales in China led to a 67% YoY rise in international revenue. Management updated revenue guidance to $2.7 billion for the full year, implying 37% YoY growth, thanks to its new game releases and significant growth from its advertising business. 2021 year-end net loss guidance stands at $135 million.
Recent days saw a peer, Corsair Gaming (NASDAQ:CRSR) join the ranks of meme stocks. Various social media groups hype it as the next millionaire-maker stock. Therefore, Zynga shares could well follow suit.
ZNGA stock currently hovers around $10.30, up almost 5% YTD. Despite its net loss guidance, ZNGA stock trades at 43.48x its forward P/E, higher than Activision Blizzard’s (NASDAQ:ATVI) forward P/E at 25.32. ZNGA stock’s P/S ratio stands at 4.81.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
