Huge rallies boost Tupperware, Yellow shares into 'meme stock' club
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[August 02, 2023] By
Medha Singh and Chibuike Oguh
(Reuters) -Shares of Tupperware Brands Corp, Yellow Corp and other U.S.
companies have soared in recent days, reminding analysts of so-called
"meme stock" rallies in which strong demand from retail investors fueled
huge gains in stocks that had fallen out of favor on Wall Street.
Shares of trucking company Yellow jumped more than 78% on Tuesday, after
more than doubling in the previous session, following a news report that
private equity firm Apollo Global Management was nearing a deal to
provide new capital to the firm after it ceased operations and prepared
to file for bankruptcy.
Home and kitchen product maker Tupperware Brands Corp's stock rose more
than 32%, after sky-rocketing by more than 575% over the past seven
sessions despite no material changes to the company's health. Tupperware
said in April it was nearing bankruptcy, weighed down by a $705 million
debt burden and slumping sales.
Analysts likened the surge in Tupperware and Yellow to stellar rallies
seen in shares of other struggling companies including home goods seller
Bed Bath & Beyond, nail polish maker Revlon and car rental company Hertz
Corp.
"I think people always want to buy the stock that is going to be the one
that explodes to the upside," said JJ Kinahan, chief executive at IG
North America.
"Another aspect is that these are often companies with products people
know and so that also leads to a certain attraction. The last reason I
believe is the large percentage of short interest in these companies,"
Kinahan added.
The original meme stock rallies, most famously, involved retailer
GameStop and movie theater chain AMC Entertainment. Their unexpected
share price gains were exacerbated by a "short squeeze" on professional
investors who had bet that the beaten-down shares would fall further.
The sharp gains were attributed mostly to individual traders posting on
social media sites.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., July 19, 2023.
REUTERS/Brendan McDermid/File Photo
Tupperware and Yellow's stocks are currently among the top 10 most
watched equities on Stocktwits, a popular website with retail
investors. Other companies on that list are American Superconductor
Corp , a small power technology firm whose shares have risen by 57%,
and electric vehicle (EV) maker Nikola Corp , which is up 18%.
Yellow and Tupperware were the second and third most traded stocks
by retail investors as of 2 p.m. EDT on Tuesday, behind only EV
maker Tesla Inc <TSLA.O>. Nikola and American Superconductor took
the fifth and sixth spot, respectively, J.P. Morgan data showed.
Market orders from retail traders made up 17.6% of total market
flows on July 31, up from a near six-month low of 14.8% on July 20,
according to J.P. Morgan data. Roundhill's Meme index had hit a more
than one-year high on Monday.
"There is really no logic," said Dan Raju, CEO of brokerage Tradier.
"Interest rate hikes tapering off pushes directional traders to jump
back into the market, touch the social media echo chambers and they
latch on to - generally what I call - unprofitable companies riddled
with debt, creating these meme stock rallies," Raju added.
(Reporting by Medha Singh in Bengaluru and Chibuike Oguh in New
York; Editing by Devika Syamnath and David Gregorio)
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