The Return of Meme Season
The Return of Meme Season
Hey everyone,
The meme stonk saga of early 2021 is easily one of the most memorable events in Wall Street history.
Now, after over a year of subdued activity, big meme energy has returned.
Let’s take a look at why retail mania is back on the menu, and how it could lay the groundwork for another Dogecoin Rise.
Meme Season
The latest meme stock rally kicked off with the IPO of AMTD Digital, a previously obscure Hong Kong-based "digital solutions" platform.
The company IPO'd at $13 and shot up to over $1600 in two weeks before plummeting back to earth.
AMTD isn't technically a meme stock, but its absurd price action signaled that, after a punishing first half of the year, surreal FOMO had returned to the market.
Next came Bed, Bath, and Beyond, an OG meme stock from 2021, which ran from $4 at the end of July to $12 in mid-August.
The main event for stonks has always been GameStop and AMC.
Both companies have built devoted followings among retail investors, collectively known as the Reddit Apes.
Energy is high in Ape country these days, as GameStop and AMC have enjoyed sustained rallies since late July.
This isn't the first time the two stocks have ran together. For long periods over the last year, they've tracked nearly identical price patterns.
A core belief for Apes is that big money manipulates price downward through devious practices like naked short-selling, synthetic shares, and high-frequency algorithmic trading.
Retail's counterstrategy has been to simply continue accumulating shares with the expectation that short-sellers will eventually have to buy back at a much higher price when meme stocks rise to their true value.
If price goes high enough, it could bankrupt short hedge funds. Indeed, there's evidence this has already started to happen on a small scale.
AMC CEO Adam Aron and GameStop Chair Ryan Cohen have encouraged the anti-establishment fervor, speaking directly to retail investors on Twitter about Wall Street corruption.
The simmering excitement around GameStop and AMC is a reminder that retail's use of social media has fundamentally transformed market dynamics.
The effects of this technological revolution are just beginning to be felt.
Though it's early days, the retail rebellion has already led to some promising developments.
Splitsville
The original idea behind the meme stock movement was to buy stocks that have been heavily shorted by hedge funds, using coordinated action of thousands of retail investors to outmuscle big money.
By some metrics, Tesla is the most shorted stock in history. Because of its devoted investor community, exponential gains, and frequent targeting by the media, it can rightfully lay claim to meme stonk status.
During the saga of 2021, Elon was a vocal cheerleader for retail, and continues show sympathy toward the movement.
In many ways, he pioneered the use of Twitter as a tool to bypass traditional media and speak directly to his investor base.
As Tesla has risen off its yearly low, he's taken a few more shots at shorts.
An intriguing commonality shared by Tesla, AMC, and GameStop is that all are in the process of issuing stock splits to investors.
GameStop issued a split as a dividend on July 21st. AMC's split took place today (Monday), with shareholders receiving one share of $APE for each share of AMC they hold. Tesla's 3-for-1 split will happen on August 25th.
Apes believe the splits will unravel short-sellers' synthetic share scheme by forcing them to return new shares they don't have.
When announcing AMC's split, Adam Aron addressed this possibility, saying he hasn't seen evidence of synthetics while acknowledging the split will function as a share count that could smoke out fake shares.
Splits aren't the only big news for Apes. Last week, a judge ruled that Robinhood would face market manipulation claims for famously restricting trading for meme stocks during the 2021 frenzy.
It was also reported that Melvin Capital, one of the hedge funds burned by meme stocks in 2021, was under SEC investigation for their behavior during the frenzy.
The re-emergence of these big names into the news suggests that the loose ends from the original meme saga may finally be tied up.
It also leads to the question: what comes next?
Doge Vadis?
In 2021, meme stock energy was shut down by big money.
As hedge funds and exchanges put a clamp on the stonks movement, money flowed out of Wall Street and into crypto.
This was especially true of Dogecoin, which began its first meteoric rise just days after retail brokers took away the buy button.
Similarities between AMC/GME and Dogecoin go beyond their shared affinity for memes.
Just as the stonks movement ran up against institutional corruption, Doge discovered its own nemesis in Grayscale CEO Barry Silbert.
Silbert is to Dogecoin what Ken Griffin is to stonks: a powerful, moneyed Wall Street villain set on blocking the rise of the little guy.
The machinations of Wall Street have forced retailers to get creative.
For the DogeArmy, this has meant a growing campaign to remove coins from exchanges so they can't be lent to short sellers.
This year, stonkers have discovered a similar tactic to keep assets out of Wall Street's hands by directly registering (DRS) their ownership of shares through a service called Computershare.
No one knows where this meme stock rally is going, how long it will last, or if we are witnessing the early stages of the mythical MOASS.
For now, the big news is that big meme energy is alive and well.
Despite countless media eulogies for the movement, the little guy is here to stay,
They have the money, but we have the memes.
Dogey Treats: News Bites
Elon posted several pictures and videos of Starship, including a static fire test and related meme. Starship was given license for orbital launch starting September 1.
As part of the Inflation Reduction Act, the IRS will be given money to hire 87,000 new agents. The IRS deleted job posting seeking applicants willing to use deadly force after it received negative attention on social media. Maps showed that more audits take place in high-poverty areas. A viral video swept across Twitter claiming that modern feminism was a psyop to get women to pay taxes. Elon posted a meme trolling the IRS.
Dogecoin.com opened a merch store using Coinbase Commerce, where shirts can be purchased in Dogecoin. Doge Dev Timothy Stebbing said that Dogecoin was far ahead of Visa in terms of payment speed. Dogecoin functionality was added to StormX, an online shopping app. When asked about creating own platform, Elon responded "X.com" and liked a tweet suggesting that Twitter and Dogecoin could form the basis for X.
Blackrock launched a private trust offering direct exposure to spot Bitcoin. Dogecoin nemesis Barry Silbert tweeted "Here comes Wall Street." Iran's Deputy Prime minister said crypto will be widespread in foreign trade by September while Iran arranged for a $10 million import using cryptocurrency. Elon posted a meme about an economic reset.
Elon asked a judge to identify Twitter employees responsible for counting bots. He sold $6.9 billion worth of Tesla shares to prepare for the possibility that a court forces the original Twitter deal to go through. A former Twitter employee was found guilty of spying for Saudi Arabia. Twitter announced plans to protect 2022 midterm elections through content moderation. The World Economic Forum proposed a plan to automate content moderation using artificial intelligence.
Elon called out The Guardian for falling for a Tesla smear campaign. Tesla increased the energy capacity of its megapack commercial battery by 50%. Tesla's Semi truck will begin shipping this year, while the Cybertruck will start deliveries next year.
The White House caught flack for claiming that the July CPI print showed "0% inflation."
The former head of JP Morgan's precious metal business and top gold trader were found guilty of manipulating the market for years.
Joe Rogan posted a stunning and recently released photograph of an alleged UFO to Twitter.
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Memes of the Week
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Disclaimer: This is not financial advice and I am not a financial advisor. The article above references an opinion for entertainment purposes only and it is not investment advice. Always assume that the author of the article is actively trading and that the opinions expressed may be biased towards the author’s holdings. Do your own research and consult with a licensed financial adviser before making any investment decision. Do not treat any opinion expressed in this newsletter as a specific inducement to make a particular investment. Content, news, research, tools, and securities symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or cryptocurrency or to engage in any particular investment strategy. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results and are not guarantees of future results. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, cryptocurrency, or financial product does not guarantee future results or returns. Dogecoin is a speculative and highly volatile asset susceptible to pump-and-dump schemes.
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