The digital realm emitted a collective cheer on May 12, 2024, as the instigator behind the 2021 GameStop (NYSE:GME) short squeeze, Keith Gill, made a triumphant return to social media. Better known by the moniker “Roaring Kitty,” Gill suddenly posted a sketch of a gamer on X following a lengthy hiatus from the platform. This cryptic post lit the spark for another meme stock trading frenzy, propelling popular picks like GME and AMC Entertainment (NYSE:AMC) to rise in value.
However, the dust has now settled a week after the meme stock rally, with the spotlight shifting towards some less prominent companies experiencing an upswing. Measured solely by the strides they have made during the Roaring Kitty rally, the real victor isn’t GameStop or AMC, but rather Faraday Future Intelligent Electric (NYSE:FFIE). Although many investors have discounted this electric vehicle manufacturer, its FFIE stock has experienced a steady ascent all week, delivering truly noteworthy gains, even after adjusting for various slumps.
The current age is one where arbitrary companies can achieve a sudden surge in value due to unforeseen meme stock momentum. When such a phenomenon surfaces, it’s wise to proceed with caution. Even though there’s a thrill accompanying a struggling, heavily shorted company when it begins to surge, the momentum isn’t usually sustainable, a lesson the recent Roaring Kitty rally has reminded investors of. This week, GME stock has dipped into the red again, with AMC battling to stay afloat. However, FFIE stock continues to thrive, up over 45% for the day despite some bouts of volatility.
This performance is commendable for any stock, and the day is far from over. Yet, to truly set apart this new meme stock from the older favorites of r/WallStreetBets, let’s examine their progress in the last five days. Despite numerous retail investors advocating for a short squeeze at the start of the previous week, GME and AMC have witnessed a slump of 70% and 62% respectively during the past five days. By stark contrast, Faraday Future has soared almost 1,300% during the same period.
It’s worth noting that FFIE shares still trade at a modest $1.40 each. However, considering it initiated May 2024 trading at a mere $0.050, its performance cannot be downplayed. Unlike other meme stocks that were losing steam last week, Faraday Future continued its upward journey, outpacing the predictable meme stock downturn. As we move into a fresh week, its progress shows no indications of decelerating.
Predicting how high FFIE stock can ascend is a challenging question to answer. However, even after the Roaring Kitty rally momentum has waned, this emergent meme stock continues to rise. This suggests Faraday Future may possess growth potential beyond just the short squeeze, and given its low trading price, many investors might deem it a worthy risk based on recent performance.
In contrast to GameStop and AMC, Faraday does not operate within a declining industry. For the movie theater industry, the future lies in offering a premium consumer experience. This visualization predicts a prosperous future for a company like IMAX Corporation (NYSE:IMAX), but a grim outlook for AMC, a company losing the interest of even retail investors. While GameStop is essentially a plastic disc retailer struggling in a tough industry, the EV market is set for a revival which could further boost FFIE stock in the coming months.
Most meme stocks hold no real growth potential and only ascend during ephemeral trading rallies. However, with FFIE, investors might be presented with a floundering company that is worth reviving. Watch out for any low-volume stocks that could be affected by market commentary. It is mandatory for writers to disclose this fact and warn readers of accompanying risks.
Samuel O’Brient, as of the date this article was published, did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The views expressed in this article are solely those of the writer.
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