Leading the pack, once again, and fresh off their big 300% victory with Bed Bath & Beyond are the self-described “Apes” of the r/wallstreetbets subreddit. Looking to follow up their short squeeze success with BBBY, the Apes appear to be positioning themselves for another potential win, this time with BYND stock.
The latest coup for the apes was Bed Bath & Beyond (NASDAQ: BBBY), which they rode to gains of up to 300% in two weeks. However, unlike GameStop and AMC, the gains were short-lived. Several prominent investors exited their positions when the rally peaked, driving the stock price down to a mere 50% gain from its low. This might signify things to come for meme stocks, as the limited audience and necessity to buy and hold their shares means that capital can dry up quickly.
As we look to the market and try to identify the next meme stock that could see explosive growth, it’s hard to look past Beyond Meat (NASDAQ: BYND). The company shares several similarities to past meme stocks. First, it’s a widely known name. Beyond Meat’s products can be found in North America’s grocery stores and restaurant menus. This name recognition will prove key if the stock sees explosive growth.
Next, Beyond Meat has a similar ratio of float to total shares as Bed Bath & Beyond (88% for Bed Bath & Beyond, 91% for Beyond Meat). A significant number of shares not being publicly traded means that individual stock trades have an outsized influence on the stock price. It also allows meme investors to buy and hold a significant amount of total shares.
Another thing Beyond Meat shares with Bed Bath & Beyond is the negative sentiment of analysts. This pessimism is a prerequisite for meme stocks because it usually means that the stock price is at depressed levels and primed for a rally. Recent analyst commentary on Beyond Meat is almost universally pessimistic, with buy ratings hard to find and sell ratings ubiquitous.
Finally, Beyond Meat has high short interest. The approximately 35% of shares that are short makes it one of the most shorted companies on the market. The heavy short interest we see with BYND is a proper primer that sets off the explosive rally.
The short squeeze (the forced exit of short positions due to margin calls) that could happen from meme investors targeting the stock would likely result in a rally similar to Bed Bath and Beyond. Whether that short squeeze takes place is likely up to the apes over at r/wallstreetbets.
Shares of Beyond Meat last traded at $26.08 per share, down -3.62% on the day. YTD BYND stock is down -59.80%.
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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.