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Meme Investing...The Fundamentals Are Coming
Howard Lindzon
June 19, 2021
I was as surprised as anyone to read Fred Wilson on ‘Meme Investing’ but here we go:
More recently we have seen meme investing move into public market stocks like Gamestop, AMC Theaters, Wendy’s, and more. The community that drives these “meme stocks” is based in Reddit and the combined purchasing power of this community is substantial, particularly in illquid stocks (and crypto assets).
It is easy to dismiss meme investing. The market capitalizations that these meme assets trade at make no sense on any fundamental analysis. But, as I’ve come to understand, that is not the point.
Memes are fun and memes are also something to come together around. Speculating on the popularity of memes and their staying power is no different than any other form of speculation.
But more than that, and this is where my head has been going on this topic, the market caps of these memes are also economically powerful. If the board and management teams of the companies with meme stocks choose to issue more shares at these prices, they can raise a lot of capital to transform these companies. Similar opportunities could exist with meme tokens. AMC recently did this with their “meme stock.”
I’ve decided that I am going to stop ignoring and dismissing meme investing and start trying to understand it better. I think it is not something that is going away anytime soon and may turn into something even more interesting.
That said, I am not suggesting that anyone invest their retirement money or their savings for their kids’ eduction into memes. I believe it is more appropriate for speculating right now. That may change. Or it may not. That is yet to be determined.
Because I use Stocktwits, I have been taking it seriously for a while.
I do not use Reddit, but like Fred says, these memes are based in Reddit which quickly spread to Stocktwits and ‘trend’ well before the media and institutions picks them up.
Like crypto, meme investing begins at retail.
Meme Investing , like SPAC’s are here to stay in the new world of retail investing/trading. It is a weird by product of the internet as power shifts ..you can hate it, ignore it or figure out how to harness it. I choose to harness it.
With Crypto and Meme Investing, The ‘flippening’ has come to fundamental and technical analysis
Once upon a time, stocks were ruled by fundamentals and the technicals industry evolved over time.
As meme investing and crypto grows, the technicals have mattered first. Fundamentals (generally accepted) will come next.
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