Reddit, once the epicenter of the meme stock phenomenon in 2021, is now finding itself as the subject of meme-like enthusiasm in the stock market.
The stock of Reddit (RDDT) surged over 12% on Tuesday, marking a more than 30% rally since its initial public offering just last Thursday.
This meme stock resurgence extends beyond Reddit. GameStop (GME), the original meme stock, experienced its most significant one-day rise in a year.
Additionally, the media special purpose acquisition company (SPAC) associated with Donald Trump, now operating under the name Trump Media and Technology Group with the ticker symbol DJT, saw its stock surge over 50% during Tuesday’s trading session alone.
“We are in a very exuberant market,” remarked Steve Sosnick, chief strategist at Interactive Brokers, to Yahoo Finance.
“We’re in a very momentum-driven market. One of the hallmarks of momentum is it becomes far less about fundamentals. It becomes all about price movement and much less about valuation. Meme stocks are the epitome of that.”
Apart from these notable names, other indicators of a risk-on market are also emerging. Bitcoin (BTC-USD) has approached $71,000 per coin, while MicroStrategy (MSTR), a stock closely tied to the price of Bitcoin, has surged over 200% year-to-date following a substantial rally on Monday.
Furthermore, commodities are experiencing significant movements, with gold (GC=F) climbing 7% in the last month and nearing an all-time high. The price of cocoa (CC=F) has also surged nearly 50% over the same period.
To Liz Ann Sonders, chief investment strategist at Charles Schwab, these developments indicate “froth” in the market.
“It’s sort of the bull market in everything theme recently with the exception of maybe bonds,” Sonders remarked. “It’s in crypto, it’s in precious metals, it’s in certain other commodities. It’s in some of the meme stocks, again, and it is [all part] of the mix.”
These significant market movements coincide with the broader market sitting at all-time highs. The S&P 500 (^GSPC) has achieved 20 all-time highs in less than three months of trading this year, suggesting a potentially historic year for record closes.
In a research note on Monday, Deutsche Bank’s equity strategy team highlighted that the $260 billion influx into equities since last May doesn’t necessarily indicate a peak in risk appetite but rather reflects an improved economic and earnings outlook.
