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Is Nio A Meme Stock; Are Meme Stocks A Buy?| Investor’s Business Daily HP NEWS


Chinese EV company Nio (NIO) is known to investors for its strong fundamentals but this automaker is not immune to meme action. Shares rose 3% Friday. Is Nio a meme stock? Are meme stocks a buy?




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Rival and EV giant Tesla (TSLA) has been cutting back prices for some of its models. According to Wedbush analyst, Dan Ives, this is driving a recovery in EV demand. Nio ranks high in popularity: after Tesla and Byd (BYDDF). China’s easing lockdowns are also a thumbs up for EV stocks, including Tesla and Nio.

NIO shares were at just 4 in early 2020. In October 2020, Nio’s popularity on social media channels triggered a massive rally, lifting the meme stock to 57.20, more than a whopping 1,250% advance. The meme stock is at its June 2020 lows.

BBBY’s Bankruptcy Looms

Meme stock Bed Bath and Beyond (BBBY) got warned on Thursday that it risks a delisting. However the reason is not the company’s near-bankruptcy. BBBY did not file its quarterly earnings for the period ended Nov. 26, 2022 on time, as required by the Nasdaq where it trades.

The stock plunged nearly 4% on Thursday and was down a further 10% on Friday.

Delisting takes time and the warning gives the home goods company 60 days to submit a plan to become compliant with Nasdaq’s rules. That is March 13, 2023. If Nasdaq accepts the plan, BBBY will get 180 days from the day the quarterly report was due to file it. The date falls on July 10, 2023.

Earlier, the meme stock rallied on hopes that it may find buyers at last. Private equity firm Sycamore Partners was in talks with the company, according to reports. As part of its bankruptcy process, the firm seeks to sell its assets, including its Buy Buy Baby chain. Shares rose over 10% on Tuesday but pared back on Wednesday. The near-bankrupt company also saw an an astronomical 133% rise on Jan. 12 after closing near historic lows on Dec. 30.

On Jan 5, reports indicated that the home good store was preparing to seek bankruptcy protection. The company hoped to avoid debt payments of $1.5 billion falling due in Feb through a Chapter 11 filing.

In its third quarter, the Union, NJ based company had a 33% decline in sales of $1.25 billion with loss per share of $3.65. According to other reports however, the stock is rising on the first short squeeze of 2023. A short squeeze is when a stock rallies and sellers have to cover their short positions. That drives the stock even higher in the short term.

The retailer rose over 200% to 53.90 in January 2021 and settled back to long-term averages for the rest of the year. It then spiked more than 30% to $30.06 in March 2022, with frenzied buying after entrepreneur Ryan Cohen bought a 9.8% stake. Shares crashed in August after he exited his position.

BBBY stock is trading just below $4 as the third week of 2023 kicks off.

Is Tesla A Meme Stock?

Misfortune has been snowballing for Tesla (TSLA) this year. The stock traded at a high of 390.91 in Dec. 2021 and fell more than 50%, slicing through its 50- and 200-day moving averages.

Tesla fell over 2% on Wednesday as the probe into Musk’s 2018 tweet starts. Musk’s tweet indicated an interest in taking Tesla private and may have caused the stock to swing wildly, according to reports. Shares bounced back 5% on Friday even as the investigation gains steam.

Unpredictable moves are common in meme stocks. Is the Tesla price action a signal for the next meme move?

Are Meme Stocks A Buy Now?

Meme stocks are speculative plays, known for high levels of unpredictability because they can rally or crash in any market, and at any time. Their meteoric rises and heart-stopping crashes typically depend on social media hype and online interest.

Hyper stock valuations for these companies depend, for the most part, on young fans and an anonymous following that can appear or disappear overnight. Retail investors dominate the interest in these stocks.

These stocks do follow traditional investment wisdom, which says you should buy stocks based on growth and performance.

Top Meme Stocks to Watch

GameStop (GME) saw sales fall 8% to $1.18 billion, from $1.29 billion in its third quarter. A loss per share of 31 cents was slightly better than the 35-cent loss the previous year. The meme stock rose over 11% in strong volume. The action has started a mini-meme rally, although the stock is far removed from its 2021 frenzy.

The video game retailer grew a fan base in late 2020. In January 2021, the stock shot up 1,625% to 81.25 and then crashed to 15 in February 2021. However, it climbed back up to 265 by mid-March. GME is also trading at Feb. 2021 levels.

GME rose 4% on Friday.

Meme stock AMC (AMC) rose a whopping 20% on Tuesday. Yet the company may have done the right things to improve liquidity and protect itself from the perfect storm of mounting interest rates and crashing stock values.




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AMC issued AMC Preferred Equity (APE) shares in August 2022. Shareholders got one stock of APE for every share of AMC. The movie chain had incurred massive debt, to the tune of $5.4 billion during the pandemic, and wanted new shares to pay down its loans. The issue was dilutive and brought down the stock value by 30%.

The movie stock also announced a reverse 10-for-1 stock split and funding through Antara Capital. AMC will sell $110 million APE to Antara at 66 cents per unit. Antara will also exchange AMC notes of $100 million for 91 million APE units. APE rose while AMC fell heavily after the news.

APE had been in free fall but the issue helped AMC write off $144 million in debt and raise $37 million in equity.

On Dec. 19, the movie company announced it had strengthened it balance sheet with an improved liquidity position of $162.5 million through APE. The Kansas company also bought properties in Boston and now expects liquidity between $725 million and $825 million, including $211.2 million in unused revolving credit line.

 

 

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