Meme stocks are those that hog attention of retail traders due to the hype surrounding them on online forums like Reddit, Twitter and Robinhood irrespective of their fundamentals, leading to a surge in both volumes and share prices. Thus, these stocks are considered highly speculative.Commission-free and easy trading on apps have led to a surge in retail trading. It made up about
23% of total US equity trading in 2021, per FT.
Reddit's WallStreetBets forum came to fame at the start of 2021 with the GameStop craze.
GameStop Corp. (GME) soared immensely then. We are currently seeing the repeat of same event a GME stock is up 50% in the past five days and has gained about 30% on Mar 21, 2022. So is the situation for another Reddit favorite struggling movie theater chain AMC Entertainment Holdings, Inc. ( AMC Quick Quote AMC - Free Report) , which has seen shares jump 15% on Mar 21. The stock added 10.8% after hours on Mar 22.
The more than 11-million-member Reddit's WallStreetBets forum has driven the conversation in the above-said meme stocks lately,
per a businessinsider article. The article also pointed out the most mentioned stocks on Reddit's forum. Those are: Tesla (TSLA), Alibaba (BABA), Advanced Micro Devices (AMD), ZIM Integrated Shipping Services (ZIM), Nvidia (NVDA), Boeing (BA), Apple ( AAPL Quick Quote AAPL - Free Report) , Meta Platforms (FB) and Amazon ( AMZN Quick Quote AMZN - Free Report) .
While such stocks can be played to tap meme stocks, there is a pureplay ETF called
Roundhill MEME ETF (MEME) on the same concept. The underlying Solactive Roundhill Meme Stock Index consists of 25 equal-weighted U.S. listed equity securities that exhibit a combination of elevated social media activity and high short interest. It charges 69 bps in fees.
Then there is
VanEck Vectors Social Sentiment ETF BUZZ), which holds 75 large cap stocks that exhibit the highest degree of positive investor sentiment. It uses AI to aggregate content from online sources including social media, news articles and blog posts.
There is yet another ETF
AdvisorShares Alpha DNA Equity Sentiment ETF ( SENT Quick Quote SENT - Free Report) , which provides equity participation in bull markets and downside protection through put options when markets turn bearish. Any Other ETF Options?
Here we discard the choosing of Boeing (BA) given its latest 737-800 crash in China. We also discard Alibaba and Facebook as the duo have Zacks #5 (Strong Sell). But investors can play other companies via an ETF route by betting big on the funds that are heavy on the respective stock. In this regard, below we highlight five ETF areas that tap the latest Reddit frenzy.
Information Technology Apple ( AAPL Quick Quote AAPL - Free Report) – Zacks Rank #1 (Strong Buy); Average Earnings Surprise for Past 4 Quarters: 20.28% ETF: Technology Select Sector SPDR Fund ( XLK Quick Quote XLK - Free Report) Semiconductors NVIDIA NVDA – Zacks Rank #2 (Buy); Average Earnings Surprise for Past 4 Quarters: 7.04% Advanced Micro Devices AMD – Zacks Rank #1; Average Earnings Surprise for Past 4 Quarters: 17.03% ETF: VanEck Semiconductor ETF ( SMH Quick Quote SMH - Free Report) Electric Vehicles Tesla TSLA – Zacks Rank #2; Average Earnings Surprise for Past 4 Quarters: 33.26% ETF: Simplify Volt Robocar Disruption And Tech ETF ( VCAR Quick Quote VCAR - Free Report) Shipping ZIM Integrated Shipping Services – Zacks Rank #1; Average Earnings Surprise for Past 4 Quarters: 22.67% ZIM ETF: SonicShares Global Shipping ETF ( BOAT Quick Quote BOAT - Free Report) Online Retailing Amazon ( AMZN Quick Quote AMZN - Free Report) – Zacks Rank #3 (Hold); Average Earnings Surprise for Past 4 Quarters: 167.33% ETF: ProShares Online Retail ETF ( ONLN Quick Quote ONLN - Free Report)