What happened
Many of the so-called meme stocks have held much of their gains after social media users began to drive the stock prices higher earlier this year. Original meme names GameStop and AMC Entertainment are up 1,000% and 1,970%, respectively, since the start of 2021. But other names joined the party along the way. Apparel retailer Express (EXPR +0.00%) and fitness drink maker Celsius Holdings (CELH +0.12%) are 515% and almost 70% higher, respectively, year to date. One name that has fallen is online gaming company Skillz (SKLZ 8.98%), which has lost almost 40% of its value this year. But those trends didn't hold this week, with the latter three names moving as follows as of Friday morning:
- Express was down 14.4%.
- Celsius Holdings was up 13.3%.
- Skillz was up 12.4%.
Image source: Getty Images.
So what
As with many of the gains this year for stocks pushed by social media followers, this week's double-digit moves weren't related to the underlying company's businesses. The upward move in Skillz stock, for example, could be happening for several reasons. One is that the share price dropped precipitously this year as heavily followed investor Cathie Wood seemed to lose faith in the company. Wood's exchange-traded funds (ETFs) unloaded holdings in the company, selling more than 500,000 shares in July 2021. Skillz is now barely in the top 50 holdings of Wood's combined ETFs, representing only about a 0.54% weighting in her holdings.
Now what
Where Skillz stock goes from here will likely be determined by its path to profitability and the success of its gaming platform in the long run. Express's business already seems to be accelerating nicely. It reported last week that sales grew 86% in its second quarter compared to the prior-year period. The fashion apparel retailer also reported positive net income when it showed losses in the comparable periods of both 2020 and 2019. But as mentioned previously, Express's stock had already soared this year, so it's not surprising to see a pullback even after a strong quarter.
Similarly, Celsius Holdings recently reported revenue growth of 116% in its second quarter compared to the prior-year period, with North American sales gaining 157%. Net income grew 150% to $4 million.
But the moves this week seem to be more fallout from prior moves driven by retail traders. That may continue as highly shorted stocks like Skillz remain topics of conversation on social media forums. But timing those moves is impossible, and in the end, the businesses themselves will determine the stock price trajectory.
