What Happens To A Meme Deferred?

This morning, once I decided that I wanted to write about the slow demise of the meme stock phenomenon, I ran through some puns that I hoped would be clever.I was thinking of using “Requiem for a Meme” (which I reserve the right to use at a future date), but then realized that Langston Hughes’ poem “Harlem” summed up my thinking perfectly:

What happens to a dream deferred?

         Does it dry up
          like a raisin in the sun?
          Or fester like a sore—
          And then run?
          Does it stink like rotten meat?
          Or crust and sugar over—
          like a syrupy sweet?

          Maybe it just sags
          like a heavy load.

          Or does it explode?

The imagery uses a bit more poetic license than I would in a typical strategy piece, but the comparisons are largely valid. As meme stocks and cryptocurrencies have underperformed over recent weeks, the questions are largely valid. 

At the bottom of this piece are some charts that might help you form an opinion as to whether some popular financial products are sagging like a heavy load or exploding.I picked a selection of popular meme stocks, along with bitcoin. We see a few themes amidst them:

  • There was clearly meme mania 1.0 and 2.0. The meme stock “sector” was established in January, when these stocks all had stellar, rapid advances.GameStop (GME) was the poster child for the first wave, which also favored Koss (KOSS) and BlackBerry (BB). After the first wave, all these stocks faded quickly, but all of them settled above the levels that prevailed before late January. They all resurged in June, with AMC Entertainment (AMC) as the leader. But only AMC and Build-a-Bear (BBW) moved to fresh highs before fading.
  • The declines that we saw in February were more explosive in some cases as well. The biggest winners in January (GME, KOSS) were the biggest losers. All the meme stocks gave back most of their gains, but those that rose fastest also declined most precipitously. The current declines are more of a slow leak than a balloon bursting, however.
  • Bitcoin moves at its own pace. While cryptocurrencies also exploded higher early this year, the rise was sustained into April rather than petering out in February. I have posited that there was some investor rotation from meme stocks into crypto and vice versa, which would explain why bitcoin lagged during meme mania 1.0, and why meme mania 2.0 arose when cryptos sank in May. 
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