It seems that meme stocks are displacing small-caps when it comes to investor interest. While the Russell 2000 (RUT) index is lagging, having gained 3.9% year-to-date, the S&P 500 (SPX) is nearing 10% gains for the same period.
At the same time, some meme stocks have entered triple-digit returns territory. Following the successful public debut of Reddit (NYSE: RDDT) at $47 per share, the social platform appeared to engender a broader trading engagement.
Steve Sosnick of Interactive Brokers (NASDAQ: NASDAQ:IBKR) called this sentiment “a very momentum-driven market.” This means stock fundamentals are second to “pumpamentals”. Here are the three meme stocks that took the public spotlight.
Trump Media & Technology Group
When former President Trump stepped down, he encountered vast hatred from the media and the judiciary system. With each legal battle, Trump’s popularity jumped. Predictably, this is mirrored in his Twitter alternative, Truth Social, launched in February 2022.
Over the last year, Trump Media & Technology Group Corp (NASDAQ:DJT) oscillated between $5.6 billion and $4 billion market cap. This all changed in March ahead of the ticker symbol switching from “DWAC” (following the merger with the blank check company Digital World Acquisition Corp.) to “DJT.” Over the month, DJT shares jumped 42%, tracking 277% year-to-date performance.
Research firm Similarweb noted that Truth Social had a fraction of the major social media platforms, at 5 million active users in February. While this may seem low compared to TikTok or Facebook (NASDAQ:META), engagement is higher than on other alternatives, such as Parler or Gettr.
For comparison, the reactivated @realDonaldTrump Twitter account has 87.4 million followers. It has been speculated that the former President refused to return to Twitter (X) due to investment obligations in Truth Social, although he left his position as Chairman and Director.
As the presidential campaign heats up, accompanied by Trump’s outtakes from rallies, DJT shares will likely serve as a sentiment proxy. This means the stock could go even higher while having exceedingly impressive YTD performance.
Robinhood Markets, Inc.
As meme energy ramps out, it makes sense that the popular stock broker is also up. Drastically outpacing the S&P 500, Robinhood Markets Inc (NASDAQ:HOOD) stock is up 60% year-to-date. Traders have perceived the stock as heavily discounted, following significant net losses in 2021 ($3.68B) and 2022 ($1B).
Robinhood concluded Q4 2023 with a net income of $30 million; however, it increased its year-over-year revenue by 37% to $1.9 billion for the full year. Based on 15 analyst insights aggregated by Nasdaq, the average HOOD price target is $16.58 vs the current $19.81, suggesting overboughtness. The high estimate is $30, while the low forecast is $11 per share.
Iamgold Corporation
In third place in gains, IAMGold Corporation (NYSE:IAG) has gained 28% value year-to-date. True to its name, the company generates revenue through gold production and exploration of new mining sites. Other revenue sources include joint ventures with mining companies, royalties sales, and investment income.
Gold is up modestly for the same period as a commodity, at 6.4%. In the latest Q4 2023 earnings, Iamgold reported 43.6% revenue growth at $297.6 million, but it is still delivering a net loss of $9.4 million. Nonetheless, the company beat the estimated earnings per share of $0.02 at $0.06 EPS.
Based on 11 analyst insights pulled by Nasdaq, the average IAG price target is $2.95 vs. the current $3.15 per share. Given that the gold mining sector is cyclical, investors should seek exposure to this penny stock at more favorable price levels.
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Disclaimer: Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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