Support.com, other new meme stocks fall, pausing in a monster rally

August 31 (Reuters) – A range of so-called meme shares was mostly lower on Tuesday after the rounds of its shares in recent days suggested that retail investors still want to bet on popular companies in online forums.

Shares of software company Support.com (SPRT.O) rose 313% in the six trading sessions through Monday and rose more than 1,400% from the previous year. On Tuesday afternoon they fell 11.3%.

Digital marketing company Vinco Ventures (BBIG.O), up 114% since Thursday, rose 0.3% on Tuesday. The e-commerce platform Aterian Inc (ATER.O) fell 12.4% after gaining 60% in the last two trading days.

Recent moves were another sign that the wild attractions associated with meme stocks could be a feature of the markets for a while to come. For the past eight months, Wall Street has witnessed impressive rallies in GameStop shares and other shares favored by individual investors gathered in forums like Reddit’s WallStreetBets.

Another sign of the phenomenon’s permanence potential came on Monday, when shares of Paypal (PYPL.O) jumped after a report exploring ways to allow U.S. customers to trade individual shares on their platform. Read more

On Tuesday, the Wall Street Journal reported that Fidelity Investments plans to hire another 9,000 employees this year due to growing demand for stock markets and other personal investment services.

“Retail and momentum are now a relevant facet of daily trading,” said Ihor Dusaniwsky, CEO of S3 Partners. “It moves prices and institutional investors realize that.”

Options trading probably exacerbates the movements of some stocks. Vinco Ventures ’options volume stood at 259,000 contracts in the early hours of Tuesday afternoon, making it the sixth most active individual stock name in the entire options market, according to Trade data Alert.

AMC Entertainment Corp., which rose along with GameStop in January and experienced subsequent mergers in recent months, was the third most active, with 406,000 contracts. AMC shares rose 7.8%.

Some of the more recent meme stocks also have unusually high short interest rates, making them targets for investors who want to force a short squeeze. This can make stock prices much higher as bearish investors are forced to roll out bets on a stock.

The short interest rate on Support.com shares, for example, recently stood at around 60%, while Vinco’s short interest rate was 20%, according to S3 data.

Dusaniwsky said the massive volumes of some of the shares show that most of the gains came from bullish investors who were piling up rather than enduring closing positions. Support.com’s trading volume over the last three sessions, for example, was 115 million shares, or about 6.6 times the 50-day moving average.

This month, Support.com stated that a shareholder vote was scheduled for Sept. 10 to merge with Greenidge Generation Holdings ’bitcoin miner. Support.com announced that it will become a wholly owned subsidiary of the bitcoin miner in March.

Many market participants believe that the fashion for meme stocks is unlikely to continue if the bullish market ends every time the U.S. Federal Reserve develops easy money policies that have helped the S&P 500 double its March 2020 lows.

“If ever this was a sign that there is too much idle money in the hands of the people, the game of memes is,” said David Trainer, investment director of a research firm New Constructs. it starts to decrease, I think you will see that people are much more rational ”.

Reports by Sinead Carew, Medha Singh and Saqib Iqbal Ahmed; Edited by Ira Iosebashvili and David Gregorio

Our standards: the principles of trust of Thomson Reuters.