Can the meme stock market maintain its momentum in 2024?

Chewy stock has been surging since GameStop (GME) meme trader Keith Gill, better known as “Roaring Kitty,” revealed he owns a 6.6% stake in pet retailer Chewy (CHWY). Tastylive CEO Tom Sosnoff joins Market Domination to discuss the dynamics of meme trading.

“If you told me that three years later, in 2021, we’d still be talking about this in 2024, I think I’d be very surprised,” Sosnoff says. He calls Roaring Kitty “an extraordinary story for retail investors,” as Gill has made some unprecedented market moves in 2021. However, Sosnoff doubts that the momentum of meme stocks can be sustained this time around.

Milwaukee-based headphone maker Koss Corporation (KOSS) has been the latest addition to this year’s meme stock craze, with its stock soaring more than 210% in the past five trading days.

For investors looking to get into meme trading, Sosnoff is hesitant about stock options: “Even though these stocks are very liquid and even though they’re heavily traded, the markets aren’t great. They’re a little wide. And you have to be careful… because some of the price swings on calls to the upside are ridiculous. And if you’re not used to those swings, it just means that calls are more expensive than puts. So that’s where the velocity of risk is.”

For more expert insights and the latest market action, click here to watch this full episode of Market Domination.

This article was written by Melanie Riehl

Video Transcript

Another eventful week for the roaring kitty of meme commerce, with Chewy revealing its 6.6% stake and the stock price soaring more than 100 and 40% on Wednesday.

So what’s next for meme stocks?

And what does all this mean for retail investors?

We’re bringing in just one man to talk about this tasty CEO live, Tom Sa, for answers, Tom.

It’s always good to see you, you know, big, big picture Tom in 2021 when I was talking about meme stocks.

I don’t know if I would have thought that fast forward to, you know, July 2024, I’d still be talking about Roaring Kitty and Dave Portnoy and meme stocks.

I mean, I guess I would have been surprised if you had told me that.

Are you surprised, Tom, that this is still a trend, a theme that we talk about?

Well, obviously, I think I’m in the same camp as you.

I would have been if you had told me that three years later, in 2021, we would still be talking about it in 2024.

I think I would be super surprised.

But okay, I’ll give you another angle.

Maybe just the term “meme stock” and it’s not just like Gmes and Chewy, you know, I mean, it was the NVIDIA meme stock, you know, for an institutional meme stock, I’m not sure that’s just the new, the new term that might stick, you know, for anything that’s sort of, you know, out of control.

The story continues

So a taxonomy problem.

Okay, let’s put that aside for a second.

Um, I just, we’re just talking about uh with our news guy here that we have, we’re feeling the 2021 vibes and stay with me.

We have these mega-cap stocks, a lot of concentration favoring just a handful of stocks.

And then, all of a sudden, you see an explosion in retail sales of certain names.

We saw Games Stop and Keith Gill file a 13G. That too is a game changer.

And Chuy, do you see any similarities here?

Well, sure, I mean, first of all, there are two stories here.

The first story is about the whole story of Keith Gill’s roaring cat.

This is an extraordinary story for retail investors because someone has done something incredibly different from anything that has been done before.

And I mean, not many retail investors have turned $50 million into a few hundred million.

God knows how much money he has, but this has never been done before.

So that’s an incredible story in itself.

But the other side of the coin, I think you raise a very important point, you know, I mean, what does that mean?

Is this a repeat of 2021?

Because if you remember, we got back to normal in 2022 and it was a pretty dark year for the markets.

And I think you see, you know, you see maybe some capitulation to the upside.

You may be feeling a kind of euphoria, I don’t know if we can, you know, can we maintain these levels or are we going to normalize, particularly in terms of volatility, particularly in all the indices and everything else?

So, yeah, I’ll answer your question and say it’s a bit like 2021, not as extreme but a bit like that.

To Mr.

I’m just curious for people who are listening right now and hearing us discuss, you know, Warren Kitty and meme actions and movements and, and if they want to play whatever they want at Tom’s, what advice would you give?

Are there any general tips, tricks and advice?

Well, you know, at Tasty, we are, you know, the third largest merch store.

So we specialize in options when it comes to stocks like that, you know, most of our clients and most of our trading centers are in the options market and most of the people who trade things like Chewy and Gamestop and things that have, you know, let’s call them, they’re purely asymmetric plays.

RIGHT.

You know, you just want to risk one to win ten or something.

And so a lot of people use the options market for that and I would just be cautious in the sense that the markets out there, even though these stocks are very liquid and even though they have a ton of trading, the markets are not great, they’re a little wide and you have to be careful, you know, you, you have to be careful because some of the call biases to the upside are ridiculous.

And if you’re not used to the bullish buying bias, it simply means that calls are more expensive than puts.

So that’s where the speed of risk lies.

So that’s the only thing I would pay attention to: pay attention to the upward trend in calls.

Alright, we always appreciate a good discussion about risk management.

Um, I’ll give you the floor here.

Is there anything else you would like to say to investors regarding retail stocks?

Uh, pretty much anything.

Well, you know, as we kind of wrap up, I’m sure you’re facing the same issues that we’re facing today.

It’s just a weird week.

You know, when you have a half day on Wednesday and a day off on Thursday, it’s kind of, it’s a, it’s a weird breakup, but we haven’t, uh, I don’t think we’ve experienced, you know, that kind of, it’s been a long time since we’ve seen that, you know, a decline.

I think it’s been three days, almost 350, since we’ve had a 2% drop on the S and PS.

Um, and I think we’ve gotten to the point where, you know, we’re a little frothy, as we like to say, the ducks are quacking.

So, be careful.

All right, the ducks are quacking.

We’ll leave it there.

Thanks for the visual and audio as well.

Tom Sazen absent as usual.

THANKS.

Have a great weekend guys.