Why GameStop dropped out, but 2 new memes stocks erupted on Friday
The Reddit crowd doesn’t seem to have given up GameStop (NYSE: GME) again, but he seems to pay more attention to other names that he thinks can lead to a short press. In Friday’s trade, GameStop dived, but electric vehicle started Canou (NASDAQ: GOEV) and independent oil and natural gas company Camber energy (NYSEMKT: CEI) Soaring as discussions of the latter two names pick up on Reddit. As of 2:35 p.m. EDT, those actions had evolved as follows:
- GameStop had fallen 2.9%.
- Canoo had jumped 15%.
- Camber Energy had climbed 9%.
Heavily short stocks have continued to be a target of the retail social media community since GameStop stocks soared earlier this year. It looks like Canoo and Camber Energy are two new names that are getting the same attention. At the end of August, Canoo had over 31% percent of its public float sold short. Camber Energy had 23.5% of its float sold short as of Sept. 15, according to MarketWatch data.
Canoo is mentioned on Reddit’s WallStreetBets forum, including an article this week highlighting the lack of interest and concluding that several factors are “poised to send a young and unique electric vehicle maker into the stratosphere.” If nothing else, the brief description of the business is correct. Canoo has designed a modular electric vehicle platform for specially designed vehicles, including a van-like ‘lifestyle’ vehicle, a multi-purpose delivery vehicle and its van version. As with other memes stocks, company fundamentals are not part of the investment thesis. Canoo reported an operating loss of more than $ 100 million for its 2021 second quarter ended June 30. The company still has no income.
But Canoo stock has climbed 31% in the past two trading days as online discussions resumed. Likewise, shares of Camber Energy have jumped more than 40% since yesterday. Both stocks are trading today for at least four times their 65-day average trading volume. Camber has not even published a financial report since the end of its reporting period on September 30, 2020. Earlier this month, the company fired its auditor, saying the financial statements could not be relied upon previously. audited, and last week the company appointed a new independent accounting firm.
GameStop, the meme’s original name, left investors with more questions than answers after its last quarterly financial update. Today’s drop may also be related to CNBC’s recent coverage of internal documents from Robinhood Markets just about the days that retail brokerage was forced into a liquidity crunch during the January trading frenzy. These documents would include internal conversations about GameStop’s stock and could open up old wounds for retail investors.
But the moves in Canoo and Camber Energy shares today once again reinforce the fact that these traders are not even looking at the underlying business of the company. Canoo may, in fact, become a successful electric vehicle manufacturer. But as of now, he still hasn’t sold any products, and Camber can’t even give investors precise financial data just yet. As was said when the stock trading frenzy started: buyer beware.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.