Most InvestorPlace readers would agree that 2021 will be remembered as the year of meme stocks. These companies became popular on various websites, especially Reddit, and saw their share prices skyrocket in a matter of days.
For instance, when retail investors memed GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) over a year ago in the subreddit discussion group WallstreetBets, their stock prices went “to the moon.” Commission-free trading on the retail broker app Robinhood Markets (NASDAQ:HOOD) has also fueled the hype around such meme stocks.
Another dimension to meme stock trading is the short squeeze. Individuals, but especially institutions, sometimes sell stocks they do not own. So, meme stock traders watch the short percentage of float, or percentage of an equity that has been shorted.
Many investors debate what constitutes a high short interest percentage. Analysts suggest that if the short interest is above 20%, then a stock might be a candidate for a rapid short squeeze that leads to a run-up in price. As a result, the short seller ends up buying the shares at a higher price to keep potential losses low.
Yet, declines on Wall Street are also affecting the meme stock phenomenon. Recent research highlights, “Meme stocks are still popular, particularly with younger traders, but rallies like the one in late January 2021 now seem less likely to occur.”
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With that information, here are three meme stocks that investors should have on their radars in June:
Roundhill MEME ETF
Oversold Meme Stocks: Arcimoto (FUV)
Source: Pavel Kapysh / Shutterstock
- 52-week range: $3.09 – $18.77
Arcimoto (NASDAQ:FUV) is an electric vehicle (EV) design and production group. Its models, based on a three wheel chassis, are smaller one- or two-seater EVs. They are built for the special purposes of daily commutes, delivery and fun utility.
FUV announced first quarter (Q1) results on May 16. Revenue decreased to $650,000, compared to $1.4 million for Q1 2021. Net loss per share was 34 cents, whereas it had been 13 cents a year ago. Investors were concerned to see that cash and equivalents at the end of the quarter were only $5.2 million. In other words, to fund future growth, management could start selling shares, leading to significant dilution.
So far in 2022, Wall Street has been less than enthusiastic on EV plays, including Arcimoto. At present, over 40% of FUV shares are sold short. Thus, there could soon be a short squeeze, leading to a potential run-up in price.
FUV stock has lost close to half of its value so far in 2022 and is trading close to a 52-week low. The 12-month price forecast for FUV stands at $11.
Roundhill MEME ETF (MEME)
Source: Eviart / Shutterstock.com
- 52-week range: $5.81 – $16.49
- Expense ratio: 0.69% per year
My next choice, the Roundhill MEME ETF (NYSEARCA:MEME), is an exchange-traded fund (ETF) that invests in meme stocks. The thematic fund started trading in December 2021 and tracks the Solactive Roundhill Meme Stock Index.
MEME holds 25 equally-weighted stocks, including special purpose acquisition companies (SPACs) that were part of the hype in 2021. The index and the fund are rebalanced bi-weekly to better capture stocks with high social media activity, or a high “meme score,” and high short interest percentage.
The leading 10 holdings account for 43% of $0.7 million in net assets. In other words, this recently-launched ETF is also a very small fund.
Video game retailer GameStop; Israel-based liner shipping company Zim Integrated Shipping Services (NYSE:ZIM); plant-based meat supplier Beyond Meat (NASDAQ:BYND); crypto derivatives exchange Coinbase Global (NASDAQ:COIN); and energy company Occidental Petroleum (NYSE:OXY) are among the names on the roster.
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MEME plummeted over 50% since the peak on Dec. 8, 2021. It is down roughly 50% year-to-date (YTD) and hit an all-time low on May 12. Readers looking for short-term speculative trading vehicles could consider buying the dip in MEME using a small portion of their hard-earned capital.
Oversold Meme Stocks: Weber (WEBR)
Source: rblfmr / Shutterstock
- 52-week range: $5.72 – $20.44
Outdoor cooking name Weber (NYSE:WEBR) went public in August 2021. It is well-known for gas grills, accessories and consumables.
The industry leader put out Q2 FY’22 results on May 16. Net sales came in at $607 million, down 7% year-over-year. Adjusted net loss was $34 million. A year ago, Weber had reported adjusted net income of $98 million. Cash and equivalents were $46 million.
Management has recently introduced three new product lines that enhance its already diversified grilling portfolio. Meanwhile, Weber is looking to navigate through cost pressures. According to the updated 2022 outlook, net sales are expected to be in the range of $1.65 billion to $1.8 billion.
At present, the short percent of float is over 45%. Therefore, we could see short covering in Weber shares in the near future.
WEBR stock has lost more than 40% YTD. The current price supports a dividend yield of 2.13%. Shares are changing hands at 14.9 times forward earnings and 0.19 times sales. Lastly, the 12-month price forecast for WEBR stands at $8.
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.
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