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“I think it has a lot to do with retail investors seeing the rise in the last month from the lows in June, and wanting to be a part of that and having some fear of missing out frankly,” said George Catrambone, head of Americas trading and chief operating officer at DWS Group.
The type of meme-stock targets remain the same. Typically, the focus is on companies with either a small number of shares outstanding — making it easier to move the price — or ailing businesses that traditional investors have bet against. Congregating on social media platforms like Reddit, meme-stock traders seek to push the stock price higher, punishing others that have wagered on the demise of their favored companies and exacting revenge on what they see as the establishment.
“It’s a relatively simple playbook,” said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group. “I think the ability of information sharing, that fear of missing out and the ability to coordinate trading online is underestimated.”
Joe Saluzzi, a co-founder of Themis Trading who follows issues around high frequency trading, observed the recent meme stock run-ups from the sidelines. Meme rallies, he said, have become part of the market, but they seem to be shrinking in size. The market value of AMC, for example, soared by nearly $27 billion when it took off as a meme stock in mid-2021. Bed Bath & Beyond’s market cap, however, rose just $1.4 billion this week.
Regulators have yet to step in. Mr. Saluzzi notes that the Securities and Exchange Commission took a long look after GameStop and has yet to make any changes, though Gary Gensler, the S.E.C. chair, in June proposed centralizing more stock trading, which he said would be fairer for individuals.
“I don’t know what you are going to do,” Mr. Saluzzi said. “Trading is trading, and people like to do it. Not sure we can tell them not to.”
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