Buyer beware: New crop of meme stocks arrives

If you blinked you may have missed this, but the stock of Beyond Meat, the purveyor of meatless burger patties, had a spectacular run a few days ago.

- MICHAEL HILTIZIK COLUMNIST

BEYOND MEAT is one of the latest companies to enjoy sudden meme-dom and then a dose of reality.

(NAM Y. HUH Associated Press)

The stock had surged by more than 1,400% in the four days through Oct. 22, when shares hit an intraday peak of $7.69, up from a low of 50 cents on Oct. 16.

Given that this El Segundo-based company has never had a profitable year since its 2019 initial public stock offering, the run-up was apparently triggered by the online touting of the stock by a trader named Demitri Semenikhin, and the shares have since settled back to $1.65 (in intraday trading Thursday), the action has market observers asking if “meme stocks” are back.

The answer is no — because they've never gone away.

The appetite of small retail investors for what beckons as big scores in unloved stocks has remained strong since the meme stock trade attracted attention during the pandemic year 2021.

The “meme” sobriquet points to the most notable factor driving the swift run-up and rapid downfall of these stocks: They feed on momentum generated by internet touts, not sober assessments of business prospects and financial results. Indeed, the quintessential meme stock has little in the way of profits to catch the eye of serious investors.

Beyond Meat is just the latest company to enjoy sudden meme-dom, followed by an equally sudden dose of reality. In Beyond’s case, the surge came in the wake of its Oct. 13 announcement of the results of a debt swap deal that will massively dilute the stake of shareholders. Short sellers piled into the stock, setting up the momentary rebound typical of meme stocks.