The rise of meme stocks has taken another interesting turn as Reddit, the platform synonymous with the meme stock rally of 2021, has now become a meme stock itself. Reddit stock (RDDT) saw a surge of over 12% on Tuesday and has climbed more than 30% since its initial public offering (IPO) last Thursday.
The trend of meme stocks doesn’t stop there, as GameStop (GME), the original meme stock, experienced its best one-day rise in a year. Additionally, the Trump Media and Technology Group, linked to former President Donald Trump, saw a significant increase of over 50% during Tuesday’s trading session.
According to Interactive Brokers chief strategist Steve Sosnick, the market is currently driven by momentum rather than fundamentals, with meme stocks embodying this trend. Other indicators of a risk-on market include the surge in Bitcoin prices, the rise of Microstrategy stock following Bitcoin’s rally, and the increase in commodities like gold and cocoa.
Charles Schwab chief investment strategist Liz Ann Sonders views these market movements as signs of “froth” in the market, with the S&P 500 hitting multiple all-time highs in a short period. Despite concerns of a potential stock market bubble, many strategists argue that the influx of funds into equities is supported by positive economic and earnings outlooks.
As the market continues to experience volatility and record highs, the question remains whether this trend is sustainable or if a correction is on the horizon. Stay tuned for more updates on the evolving meme stock phenomenon and its impact on the broader market.
