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Meme stocks roar back: The shares grabbing attention – and safer British bets that may make you money


Roaring Kitty has come roaring back. The meme stock craze is once again gripping global financial markets.

But what on earth is a meme stock and who is Roaring Kitty? Can investors make their fortunes – or should they stay well clear?

The meme stock craze dates back to the dark days of the pandemic when investors turned to weird and (occasionally) wonderful ways to get through lockdown.

Shares in GameStop soared after Keith Gill posted on social media, under the usernames Roaring Kitty or Deepf***ingValue, urging ordinary investors to buy into the games retailer

Shares in GameStop soared after Keith Gill posted on social media, under the usernames Roaring Kitty or Deepf***ingValue, urging ordinary investors to buy into the games retailer

Mr Gill (bottom left with  his arm in a sling) shares his screen showing GameStop share data during his livestream

Mr Gill (bottom left with  his arm in a sling) shares his screen showing GameStop share data during his livestream

One person who shot to prominence in investing circles is Keith Gill – known to his followers on Youtube as Roaring Kitty and the rather more profane Deepf***ingValue on social media site Reddit.

The former financial analyst first shot to prominence before Covid struck in 2019 when he piled his life savings into Gamestop, a bricks-and-mortar video game retailer in the US.

His net worth – on paper – has been estimated to run into hundreds of millions of dollars.

On Friday shares in Gamestop gyrated wildly as he returned to his Youtube channel for an impromptu livestream watched by over 600,000 viewers.

With his arm in a sling and sporting a trademark bandana, Gill reiterated his faith in the video games retailer, which had earlier announced falling sales, narrowing losses and plans to sell 75million of its shares.

The news caused Gamestop’s share price – and Gill’s fortune – to plunge.

In its latest intervention, Roaring Kitty posted a cryptic drawing on Twitter last month, which could be interpreted as a renewed declaration of support for GameStop

In its latest intervention, Roaring Kitty posted a cryptic drawing on Twitter last month, which could be interpreted as a renewed declaration of support for GameStop

As this volatility shows, anyone considering emulating him should be aware of the risks.

Gill, 38, who often broadcasts his views wearing a baseball cap on back to front, has an unlikely background for a financial hotshot.

Meme stocks to watch

Here are five meme stocks that have grabbed the attention of investors.

But while some of those who bought the shares made a healthy return, many are nursing heavy losses, such is the volatile nature of the stocks.

Experts say that those who do fancy a flutter on a member stock should only put in money if you can afford to lose all of it.

Gamestop

Founded in 1984, GameStop is an American high street chain that sells video games and other electronics.

The company shot to notoriety in 2021 when an army of traders backed its shares.

On January 4, 2021, GameStop’s stock price closed trading at $17.25 per share. By the end of the month, the company’s price had exploded to a high of more than $500 per share.

After shares fell back down to earth, it inspired the film Dumb Money, starring Seth Rogan.

More recently, shares have been on the up, climbing 44 per cent since the start of the year to around $24 per share.

However, those who take a punt on the brick-and-mortar retailer should brace for the highs and the lows. Even in the past day alone shares have slumped 12 per cent.

AMC

AMC Entertainment is one of the world’s biggest cinema groups and owns chains such as Odeon.

But the company has fallen on tough times having been hammered during Covid lockdowns when cinemas were shut down.

Shares have slumped nearly 90 per cent over the past five years.

And the company has struggled to claw back value, with shares currently $4.71 a piece.

This compares to a 2021 peak of $261.44 when it was benefiting from its own meme stock hype.

Nokia

Finnish phone manufacturer Nokia – best known for its clunky phones and the game Snake – is another popular pick for meme stock investors.

The company has struggled with the rise of smart phones and sales have seen a steady decline.

But New York listed shares have been targeted by retail investors in recent years.

In January 2021, Nokia’s share price jumped 106 per cent off the back of the original meme stock rally. But like Gamestop, this rally eventually faded.

The group has enjoyed another boost following Keith Gill’s return.

Shares have climbed 12 per cent in the year to date and are currently trading at around $3.86 per share.

BlackBerry

The days when BlackBerry phones were a tech status symbol are long gone.

A Hollywood film released last year even charted the phone’s dramatic rise and fall from a must-have accessory to obsoletion.

Now the company is a cybersecurity firm – and a target of ‘meme stock’ traders.

BlackBerry’s share price peaked at $147.55 in June 2008 at the height of its popularity.

Since then, however, the price has plummeted to as low as $2.68.

The stock rallied last month as traders piled in hoping to make quick cash – rocketing 12pc in one day before losing all its gains.

Cassava Sciences

Cassava Sciences – known among traders as ‘Sava’ – is a US biotech firm.

Its shares soared to dizzying heights in the 2021 meme stock rally – rising more than 1,700pc in the first seven months of the year.

It was boosted by enthusiasm on Reddit for its proposed Alzheimer’s treatment, but the stock crashed in August after concerns over trial results emerged.

The company then took short-sellers to court, alleging a ‘smear campaign’.

Shares jumped 15pc last month to $23.33 but have since fallen back to around $19.

The son of a truck driver and a nurse, he was brought up in the small city of Brockton, Massachusetts. His career pre-Kitty includes a stint working for a family friend at a tech start-up and a role in ‘financial wellness education’ at an insurance company.

He joined Twitter ten years ago as Roaring Kitty, and has been pouncing on opportunities ever since.

As for Gamestop, for a while his enthusiasm looked misplaced.

By January 2021, the company, whose sales have been in decline, had become one of the most widely ‘shorted’ US companies – as hedge funds bet the shares would fall.

Gill and a group of ordinary investors decided to strike back against the short-sellers through a mass buying of shares.

Gamestop climbed above $120 a share in early 2021 from as little as $3 in the space of three months.

Traders who piled in at the right time enjoyed major windfalls before Gamestop shares crashed back down to earth.

On the other side, hedge funds lost billions.

But the David and Goliath-style episode sparked a backlash from politicians and regulators.

Concerns mounted that this mass buying – although not inherently illegal – distorted the market and undermined prices.

The US watchdog the Securities and Exchange Commission investigated the meme stock craze.

But the cat – or Roaring Kitty – was out of the bag. Other meme stocks were also gripping traders’ imaginations including American homeware retailer Bed, Bath & Beyond and Odeon Cinemas owner AMC.

The craze died down, but Roaring Kitty is on the prowl again.

Gill last month broke a near-two-year silence – returning to social media to post a cryptic image of a man leaning forward in a gaming chair.

In an instant, meme stock mania returned, and Gamestop shares almost doubled in a matter of hours. They came crashing down once again, but in the chat rooms there was talk of little else.

At the start of this month, Gill posted a screenshot revealing a £91m stake in Gamestop and the shares took off.

Other meme stock favourites such as AMC have been caught up in frenzy.

Not everybody is pleased with this revival.

Boaz Weinstein, US hedge fund manager and founder of Saba Capital Management, says it is ‘bewildering’, adding: ‘In some ways you could say it makes a mockery of the challenge of investing. It can’t be justified on anything other than pure speculation.’ 

Former financial regulator Jay Clayron, who ran the Securities and Exchange Commission under former president Donald Trump, said: ‘It bothers me on many levels. It’s a lot closer to gambling than it is to trading and it’s certainly not investing.’ Regulators are now sniffing around.

The Massachusetts securities regulator said earlier this month it is looking into Gill’s social media shenanigans.

City experts counsel caution.

Kyle Rodda, senior market analyst at Capital.com, told the Mail: ‘I don’t think we will see a repeat of early 2021.

‘Brokers are more wary and prepared for speculative attacks by armies of angry retail traders, meaning such behaviour is more likely to be shut down before it can take off.’ 

He added: ‘Another trend is the persistent resentment towards Wall Street and the financial establishment and an almost nihilistic desire to strike back against it.’ 

Buyer beware, is the advice from experts to anyone considering meme stocks.

Lindsay James, investment strategist at Quilter Investors says that many private investors who were caught up in the craze have been hit by ‘substantial losses.’ 

As Dan Ives, tech analyst at Wedbush Securities, says: ‘The meme stock phenomenon is a dangerous and slippery slope for many retail investors who just jump in to make money.’ 

‘Stocks at the end of the day are based on fundamental value and meme stocks could have massive volatility that cause huge swings up and also huge swings down. In Vegas you don’t put all the chips on the table at 3am playing craps.’

Five solid UK anti-meme shares

By Jessica Clark

Not keen on the memes? Here’s what you could buy instead…

Long term investors should avoid too much speculation – if you do fancy a flutter on a meme stock, only put in money you can afford to lose.

If the excitement is all too much and you’d rather give volatile meme stocks a miss, experts say there are plenty of shares in fundamentally strong businesses, that also pay out a decent dividend to provide an income. Here are five ‘anti-meme’ stocks:

BP

After a scandal that saw former boss Bernard Looney leave in disgrace, BP is back on firm footing with company veteran Murray Auchincloss at the helm.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the oil major’s focus on fossil fuels with ‘one-eye’ on renewables and low-carbon energy makes it a reliable long-term option.

‘It already generates enough renewable energy to power around 2 million homes and has a pipeline of projects that could see this capacity increase more than 20 times over,’ she said.

‘This emerging focus on cleaner forms of energy is highly capital-intensive but the business has a strong record of cash generation, which has been particularly impressive post-pandemic.’ BP offers a dividend yield of 4.86pc.

NatWest 

Interest rate cuts this year will reduce the bumper profits banks made during the cost-of-living crisis. But UK lenders are strong ‘anti-meme stock’ contenders.

The bank has in the past been prone to banana skins, the most recent of which was the row over ‘de-banking’ Nigel Farage. Conservatives had planned to sell off the remaining government stake in NatWest to investors. That is now on ice due to the election. 

Nevertheless, the lender is ‘showing signs of promise’, according to Streeter, and will benefit from easing conditions in the mortgage market.

More rate reductions have been priced in by management than markets now expect so ‘revenue guidance also looks conservative’ – in plain English, it may rake in more money than anticipated.

The bank offers a dividend yield of 5.4pc.

Greggs 

Another share Streeter likes is Greggs.

Sales at popular bakery chain beat market expectations last year and analysts expect changes at the company to boost performance even further.

The nation’s favourite sausage roll seller has revamped its menu, refreshed stores and added extra delivery options to lure in more customers.

It is preparing to launch an evening hot food menu, which experts believe has ‘big potential’.

Greggs offers a dividend yield of 2.1pc.

AstraZeneca 

AstraZeneca has gone from strength-to-strength since CEO Pascal Soriot took the reins in 2012.

The pharma giant last month revealed plans to almost double revenues to £60bn by the end of the decade.

It will roll out 20 new drugs – some of which have blockbuster potential – with a focus on cancer treatments which currently make up a third of sales.

The drugmaker’s growth in rare disease medicines also offers diversification, Streeter says.

AstraZeneca’s dividend yield stands at 1.8pc.

Nichols 

Nichols – the 116-year-old maker of soft drink Vimto – is another London-listed stock that could provide steady returns.

Russ Mould, investment director at AJ Bell, said the ‘pricing power conferred by its brands’ means Nichols has a ‘history of double-digit operating margins and returns on equity’.

The company has a dividend yield of nearly 3pc.

Compare the best DIY investing platforms and stocks & shares Isas

Investing online is simple, cheap and can be done from your computer, tablet or phone at a time and place that suits you.

When it comes to choosing a DIY investing platform, stocks & shares Isa or a general investing account, the range of options might seem overwhelming. 

Every provider has a slightly different offering, charging more or less for trading or holding shares and giving access to a different range of stocks, funds and investment trusts. 

When weighing up the right one for you, it’s important to to look at the service that it offers, along with administration charges and dealing fees, plus any other extra costs.

To help you compare the best investment accounts, we’ve crunched the facts and pulled together a comprehensive guide to choosing the best and cheapest investing account for you. 

We highlight the main players in the table below but would advise doing your own research and considering the points in our full guide linked here.

>> This is Money’s full guide to the best investing platforms and Isas 

Platforms featured below are independently selected by This is Money’s specialist journalists. If you open an account using links which have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence. 

DIY INVESTING PLATFORMS AND STOCKS & SHARES ISAS 
Admin charge Charges notes Fund dealing Standard share, trust, ETF dealing Regular investing Dividend reinvestment
AJ Bell*  0.25%  Max £3.50 per month for shares, trusts, ETFs.  £1.50 £5  £1.50 £1.50 per deal  More details
Bestinvest* 0.40% (0.2% for ready made portfolios) Account fee cut to 0.2% for ready made investments Free £4.95 Free for funds  Free for income funds More details
Charles Stanley Direct* 0.35%  No platform fee on shares if a trade in that month and annual max of £240 Free £11.50 n/a n/a More details
Fidelity* 0.35% on funds £7.50 per month up to £25,000 or 0.35% with regular savings plan.  Free £7.50 Free funds £1.50 shares, trusts ETFs £1.50 More details
Hargreaves Lansdown* 0.45% Capped at £45 for shares, trusts, ETFs Free £11.95 £1.50 1% (£1 min, £10 max) More details
Interactive Investor*  £4.99 per month under £50k, £11.99 above, £10 extra for Sipp Free trade worth £3.99 per month (does not apply to £4.99 plan) £3.99 £3.99 Free £0.99 More details
iWeb £100 one-off fee (waived until July 2024) £5 £5 n/a 2%, max £5 More details
 Accounts that have some limits but attractive offers    
Etoro*  No investment funds or Sipp Free Investment account offers stocks and ETFs. Beware high risk CFDs. Not available  Free  n/a  n/a  More details 
Trading 212*  Free  Investment account offers stocks and ETFs. Beware high risk CFDs.  Not available  Free  n/a  Free  More details 
Freetrade* No investment funds  Basic account free,  Standard with Isa £4.99, Plus £9.99 Freetrade Plus with more investments and Sipp is £9.99/month inc. Isa fee No funds  Free  n/a  n/a  More details 
Vanguard  Only Vanguard’s own products 0.15%  Only Vanguard funds Free  Free only Vanguard ETFs  Free  n/a  More details 
(Source: ThisisMoney.co.uk May 2024. Admin % charge may be levied monthly or quarterly

 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.



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