Everybody loves a good comeback story. From Rocky Balboa to Tiger Woods comeback stories expand our perception of what’s possible. The stock market certainly loves a good comeback and meme stock investors have led the charge in helping companies defy the odds while increasing their profits.
GameStop (NYSE: GME) is certainly the most famous meme stock. Retail investors drove the stock up 8,000% from $3.25 to a peak of $469.42. At the center of this rally was a battle between amateur investors and multi-billion dollar hedge funds. Reddit users noticed hedge funds were heavily short-selling the stock, particularly the $13 billion hedge fund Melvin Capital. In mid-2019, a Reddit user (Roaring Kitty) posted a picture showing a $53,000 investment in GameStop. Though the post didn’t get any attention then, the user frequently tweeted about the retail store and the investment. Finally, it caught the attention of many young online traders. This led to the share prices increasing to unwarranted levels.
Short sellers lost an estimated $23.6 billion on GameStop in this rally.
AMC Entertainment (NYSE: AMC) and Bed Bath & Beyond (Nasdaq: BBBY) were also swept up in this meme stock rally.
These initial rallies were not based on any fundamental valuation which is why they eventually fizzled out. However, they did highlight how high a stock could jump if it created a ‘short squeeze’ and bounced from ‘oversold’ prices.
There are several legitimate comeback stories brewing on the markets today that could bring a more lasting rally for early investors. There are two, in particular, to pay attention to.
THREE POTENTIAL MEME STOCKS TO RESEARCH NOW
Ascent Solar Technologies, Inc. (OTCMKTS: ASTI) is a solar energy company with a breakthrough CIGS thin-film technology that creates lightweight, highly durable solar modules which are far more useful than their heavier more fragile counterparts.
Founded in 2005 and IPO’d in 2006, the issue ASTI ran into was its technology was a bit before its time, and the company’s lack of cash flow almost forced it to close its doors.
The company then received several millions of dollars in capital investment from a German solar company to provide solar modules for the German company’s patented tubular solar modules for agriculture. These tubes allow landowners to harvest both energy and crops on the same piece of land.
This saved ASTI’s corporate life!
Now the company is ascending. In its 2021 FY financial report it recorded a revenue increase of 812%. ASTI has also improved its cash balance from $170k to $6 million.
ASTI price increased 17% yesterday and message volume on stocktwits is up 22% meaning retail interest is starting to blossom. The company has been quiet, but any sort of announcement could set off serious price action.
ASTI could be the next meme winner.
Aterian (Nasdaq: ATER) is a tech company that operates a software platform that applies data analytics and machine learning to consumer products. Its stock has been very popular among retail investors since last September, when it reached a short interest of more than 23% of its float. The short activity on ATER has increased this year with the latest data as of mid-March indicating 9 million shares being shorted, a 33% increase.
One of the biggest drivers of investor skepticism on ATER was a report by Culper Research which labeled Aterian as an "overhyped artificial intelligence." However, there is a “buy consensus” rating and investors are hoping ATER can go parabolic.
Canoo, Inc. (Nasdaq: GOEV) is a California-based electric vehicle maker and a former SPAC merger. Due to high short interest levels, the stock has been in freefall essentially its initial offering down 70%. After some nice meme based runs in the fall of 2021, the stock has receded. Currently, 31% of GOEV shares’ float is short, an extremely elevated short level. A possible reason for the high short interest in Canoo is the high volatility and uncertainty surrounding the electric vehicle space. However, with a consensus “buy” rating and an average price target of $14, Canoo shares could increase by 150% based on these valuations.
Make sure to start your research on ASTI, ATER, and GOEV today.
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