This Meme Stock Index is Up 58% YTD as Firms Post Strong Quarterly Earnings
Meme stock traders continue to bet big on distressed companies, including notable firms like AMC Entertainment and American Airlines Group. This continued growth has contributed to the 58% increase in the Solactive Roundhill Meme Stock Index this year.
What is the Solactive Roundhill Meme Stock Index?
The Solactive Roundhill Meme Stock Index is designed to track the performance of meme stocks, which have gained substantial attention and popularity over the past couple of years. This index provides exposure to companies that have attracted retail investors, particularly those participating in online communities like Reddit.
Some notable companies included in this index are GameStop, AMC Entertainment, and BlackBerry. These stocks have experienced significant price volatility due to increased retail investor interest and speculative trading.
Launched in 2021, the index was created as part of a partnership between major index provider Solactive and Roundhill Investments, an exchange-traded fund (ETF) issuer. The weightings and components of the index are rebalanced every two weeks to adjust for changes in online chatter and sentiment around different companies.
The Solactive Roundhill Meme Stock Index initially comprised 13 stocks that experienced massive price spikes in early 2021 due to social media buzz. The index now consists of 25 equally weighted US-listed equity securities that exhibit elevated social media activity and high short interest.
Join our Telegram group and never miss a breaking digital asset story.
Solactive Roundhill Meme Stock Index Up 58% YTD
The continued growth of meme stocks has contributed to the 58% increase in the Solactive Roundhill Meme Stock Index this year. The index has also seen a remarkable 143% rise in aggregate quarterly earnings for the 23 out of its 25 members that reported.
Notably, the index members have more than doubled their earnings, marking the fourth consecutive quarter of such growth. For one, AMC surprised analysts with a quarterly profit, boosted by the success of films like “The Super Mario Bros. Movie” in the second quarter and “Barbie” and “Oppenheimer” in the current quarter.
AMC’s profit surprise can be attributed to higher movie attendance in the US, which exceeded analyst expectations by 3.4%. However, analysts predict upcoming quarterly losses for AMC, with the company projecting a 31% year-on-year growth in its box office for the second half.
Potential disruptions caused by Hollywood strikes could impact movie productions and releases, possibly leading to delays. Despite these challenges, AMC’s stock rally, improved earnings expectations, sales growth, and frequent media coverage indicate positive signs for the company.
Similar trends can be observed among other meme stocks in the Investable Universe. Tupperware Brands, an American multinational company that produces home product lines, experienced a significant rally following a debt restructuring agreement on August 4.
Furthermore, American Airlines and Mattel Inc. have shown a four-level improvement this year, while Delta Air Lines Inc. and AMC saw a three-level rise. On the other hand, trucking company Yellow Corp. has faced volatility after temporarily shutting down and filing for bankruptcy.
As reported, meme stocks are coming back in 2023, leading the charge in a resurgence of risk-on investments this year. The MEME ETF, an ETF tied to the Solactive Roundhill Meme Stock Index that tracks the performance of meme stocks, has shown impressive gains, rising by more than 36% this year.
Do you think meme stocks will continue their upward movement this year? Let us know in the comments below.