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Commentary: Meme stocks are still with us, offering new temptations for novice and unwary investors

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Commentary: Meme stocks are still with us, offering new temptations for novice and unwary investors

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.

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.

I’ve been seeing signs of a ‘flight to crap’ recently.

— Market strategist Steve Sosnick

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The appetite of small retail investors for what beckon 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.

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Over the last few months, meme stock traders have piled into, and then out of, shares in Krispy Kreme, GoPro, Kohl’s and other companies that are disdained as underperformers by the Wall Street establishment, only to be taken up by an internet-fueled army of small investors. But those investors seldom have the resources to survive the almost inevitable snapback.

For those who may not recall the meme stock frenzy of 2020-21, here’s a trip down memory lane.

The emblematic meme stock of 2021 was GameStop, a spavined mall-based video game retailer that was struggling through the transformation of its franchise from brick-and-mortar stores to online commerce. The company had lost a combined $1.36 billion from 2018 through 2020, and its future looked bleak.

Then, as if out of nowhere, the stock got noticed by online investment promoters, who urged followers to buy GameStop shares to hurt Wall Street short sellers, who were betting that the stock would keep falling.

The shares climbed relentlessly through January 2021, soaring from a low of $12.16 in mid-December to an intraday high of about $483 on Jan. 28. It closed that day at $193.60, delivering a prompt lesson that investing in stocks based on claims touted online is a mug’s game.

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All this action was the product of several confluent factors. One was the pandemic and its attendant lockdowns, which prompted people deprived of social contacts and customary entertainment pursuits to fill their empty hours day-trading stocks. Internet influencers goaded their followers into trading in concert with the goal of putting it to the Man — i.e., rich Wall Street hedge fund managers who were shorting unloved stocks and deserved to be taken down a peg.

GameStop stock wasn’t the first issue to get memed. In 2020, investors piled into Hertz, even though it had been forced to seek bankruptcy protection after the COVID-19 outbreak cratered the rental car market,. Bloomberg even declared 2020 “the year of the meme stock.” (Hertz abandoned a plan to sell new shares into the frenzy after regulators raised questions about it.)

But it was GameStop that made meme stock trading into, well, a meme. GameStop displayed all the elements that drove the meme frenzy, the Securities and Exchange Commission ultimately reported: “(1) large price moves, (2) large volume changes, (3) large short interest, (4) frequent Reddit mentions, and (4) significant coverage in the mainstream media.”

A key element of the meme market was an influx of young individual investors enthralled by get-rich-quick trading come-ons. Robinhood, an online brokerage that cut commissions to zero and enticed new customers with an app that made stock trading resemble playing a video game, disclosed that “its average customer is 31 years old and has a median account balance of $240,” the SEC reported.

One might have expected that as these factors ebbed, the meme stock frenzy would evaporate. It did, somewhat, but not nearly as much as Wall Street pros expected. Indeed, as GameStop rose, the buyers gleefully declared victory over the shorts, fueling the search for more meme-able stocks. Some investors made the theater operator AMC Entertainment a meme stock. Some joined new crazes, such as cryptocurrencies, nonfungible tokens and other assets more or less immune from the traditional investment fundamentals such as revenues and profits and business plans.

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Nothing was especially new about individual stocks having a moment in the sun before falling back into obscurity, but the frenzy of early 2021 turned meme stocks into an assiduously followed investment category all its own. Financial pages and tout sheets ran wrap-ups of meme action every year. GameStop and AMC were perennial members of this club, supplemented by newcomers.

In 2022, the star was the bankruptcy-bound retailer Bed Bath & Beyond, which staged a nine-day rally that summer culminated in a one-day 40% surge Aug. 8 on extraordinary volume of 120.5 million shares. (Its Chapter 11 bankruptcy filing finally arrived in April 2023.)

To define the category, market analysts generally rely on the factors mentioned by the SEC in its reference to GameStop. But not all meme stocks were similarly obscure before having their day. One that has recently landed on meme stock rosters is Tesla: “Wildly overvalued compared to rival automakers, its shareholders are betting that they can sell their holdings to a greater fool in the near future,” economist J. Bradford Delong of UC Berkeley wrote in May 2024.

Earlier this year, Yale professor Jeff Sonnenfeld polled the attendees of his most recent CEO conference on the question: “Compared to NVIDIA’s 40x P/E forward multiple and Apple’s 30x multiple, has Tesla at 160x become the biggest meme stock in modern financial market history?”

Of the 100 participants, 83 voted “yes.”

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Meme investors have acquired new tools to follow and invest in meme targets. Bloomberg and UBS have developed meme stock indexes, and in October a meme stock exchange-traded fund — a mutual fund that trades like a stock — was launched by the investment house Roundhill.

One can hardly fault Roundhill’s warning of the risks of meme investing: “Meme Stocks are characterized by high trading volumes and significant price volatility, often driven by social media trends and investor interest,” it advises potential investors. “Meme Stocks often trade untethered from … fundamentals, driven instead by speculative fervor and viral momentum.”

“Volatility” is the mot juste for this ETF: Despite notching a 17% gain over four days shortly after its introduction, MEME is currently down more than 23% from its Oct. 14 peak.

Meme-stock buying is often triggered or sustained by a nugget of bull-market sentiment. The Beyond Meat narrative included its Oct. 21 announcement of a deal with Walmart that will place its products in more than 2,000 stores. But whether that’s enough to overcome the company’s evident financial headwinds remains questionable.

For Opendoor Technologies, a money-losing residential real estate broker that quintupled in price during a few weeks this summer and nearly doubled in price on a single trading day in September, the story was that lower interest rates would spur more housing transactions.

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Opendoor Chairman Keith Rabois bristled at a CNBC anchor’s description of the company as a meme stock during an interview in September, arguing that investors have begun to appreciate its “potential upside.” Beyond Meat didn’t respond to my request for comment on its share price. (Opendoor was the Roundhill ETF’s largest holding when the ETF was launched; more recently, the largest holding has been Beyond Meat.)

The economic fundamentals underlying the overall stock market don’t seem to have much to do with meme stock rallies. The original craze developed when interest rates were close to zero, making stocks look attractive compared with fixed income investments; the current craze has unfolded during a period of high interest rates and economic uncertainty — though that hasn’t stopped the major stock indexes from notching record highs lately.

Small investors would be well advised to keep in mind that the meme market could be the very definition of a risky place to trade. Meme investors tend to crowd into a stock after it has already begun its rapid march upward — and sometimes when that trend is about to reverse.

GameStop hasn’t fallen back to its pre-frenzy price in the low double digits, but with its current price below $23, investors who bought at its January 2021 peak have lost about 80% of their money. (The company staged a 4-to-1 stock split in July 2022, so one must multiply its current price by four to replicate its 2021 prices.)

The smart money says that the meme trade is with us to stay. There’s just too much uninformed, misinformed and self-interested commentary washing about in the investment sphere, too easily accessed by unwary and novice investors. Most of the advice being pushed on investors today isn’t much good, and what can be gleaned from promoters on Reddit even worse. The term “buyer beware” has never been so important.

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Rent-hike ban to protect fire victims ends despite gouging concerns

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Rent-hike ban to protect fire victims ends despite gouging concerns

A rule intended to prevent rent gouging in the wake of the Eaton and Palisades fires has lapsed in Los Angeles County, possibly exposing some renters to hikes.

The executive order that blocked rent increases was issued by Gov. Gavin Newsom amid the devastating wildfires last year. Under the order, landlords couldn’t increase rents by more than 10% above their prefire levels.

The rule, which was supposed to be temporary and was repeatedly extended, ended Friday after a vote to extend it again failed to garner enough votes. Supervisor Lindsey Horvath, whose district includes Pacific Palisades, sounded the alarm in a motion to extend price protections that failed to pass at the Board of Supervisors’ May 19 meeting.

“These price gouging protections continue to be necessary as construction and rebuilding continue, and as thousands of people remain displaced,” the motion said. “Families which signed short-term leases could face drastic price increases of 50% or more without further price gouging protection.”

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Los Angeles County is home to more than 1 million rental properties, though not all of them needed protection from the new rule. There are already stricter rent increase caps for many residences, depending on the location, type and age of the building. Despite the rent control in the region, the people of Los Angeles pay among the highest rents in the country.

It is uncertain whether renters will face rapidly rising rents now that the protection has lapsed. But some real estate experts and policymakers said there was no need for the temporary rule that was part of the governor’s state of emergency.

Supervisors Kathryn Barger, Janice Hahn and Holly Mitchell abstained from voting on the motion to extend the protection, while Supervisors Hilda Solis and Horvath supported it.

“I abstained because I did not see sufficient evidence to justify extending this emergency ordinance, nor did I see evidence to eliminate it entirely,” Hahn said.

Barger’s office said she supported allowing the protections to sunset while waiting to see whether new information emerged.

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“Market data already shows countywide rents are only about 2% above pre-emergency levels and rental inventory has grown,” Barger representative Helen E. Chavez Garcia said. “The Supervisor is also mindful of the burden these ongoing protections place on small property owners throughout the county.”

Mitchell did not immediately respond to a request for comment.

There haven’t been steep rent hikes in neighborhoods within three miles of the Palisades fire, according to a Times analysis of data from Zillow, the property listing company.

In ZIP Codes within three miles of the Palisades fire, rent increased 4.8% from December 2024 to April 2025. In areas around the Eaton fire, which destroyed swaths of Altadena, rent jumped 5.2% in the same period.

In L.A. County, ZIP Codes farther from the fires saw only about a 2% increase.

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A landlords representative, Jesus Rojas of the Apartment Owners Assn. of Greater Los Angeles, told the supervisors during public comment at the meeting that the county’s rent-gouging rules have “long outlived the emergency they were intended to address” and are now being “wrongfully used to harm thousands of rental housing providers throughout the county.”

“There is no proof that multifamily rental housing providers are hugely increasing rents for impacted homeowners,” Rojas said.

Indeed, there are strong signs that the property market in the Los Angeles area has at last begun to cool.

L.A. metro-area rent prices recently fell to a four-year low, with the median rent slipping to $2,167 in December.

Meanwhile, condominium sales had their slowest start of the year in decades. Condo sales in Los Angeles have plummeted to a 20-year low, with fewer than 2,000 units sold in January and February — the worst start to the year since 2005.

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Newsom defended the price-gouging protections shortly after they went into effect.

“In the days following the Los Angeles firestorms, we worked quickly to protect Los Angeles survivors from any form of exploitation,” he said in February 2025. “The state has the tools in place to not only block price gouging during this emergency, but also to prosecute bad actors.”

The Los Angeles County Department of Consumer and Business Affairs said it received more than 2,000 complaints after the fires, alleging that retailers and landlords were taking advantage of people put in hardship by their losses, and sent out more than 2,000 cease-and-desist letters to businesses and landlords for alleged price gouging, said Morine Merritt, who oversees department investigations into consumer and real estate fraud.

“Close to 90% of the complaints that we received involved allegations of rent increases,” Merritt said in an interview. Now that the fire-related protections have expired, existing laws and “regular market conditions determine price increases for goods and services, including rents,” she said.

Crackdowns on fire-related rent gouging have been rare, said Chelsea Kirk of the activist organization the Rent Brigade, which analyzed L.A. County’s rental market in the year after the fires. It reported 18,360 potential examples of price gouging in listings but said that few lawsuits had been filed by authorities so far.

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Last week, Rent Brigade announced what it said was the first private civil lawsuit brought by a family that claimed to be rent-gouged in the aftermath of the wildfires. Plaintiffs Randall and Candy Renick, whose Altadena home was damaged, said they were charged nearly three times the maximum permitted rate for nearly 10 months. They seek restitution of $96,000 plus civil penalties and attorneys’ fees.

The rental market has probably stabilized since the fires, Kirk said, but other families may still be “locked into illegal rents” that they agreed to pay when they were in a rush to find housing after they were displaced.

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Read Nick Bilton’s Letter to Scott Pelley

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Read Nick Bilton’s Letter to Scott Pelley

Dear Mr. Pelley:

I meant what I said in my letter last week to the 60 Minutes team: joining 60 Minutes is the honor of my career and I am grateful to be working alongside the people who have contributed to the most important television journalism brand this country has ever produced. While I’m new to 60 Minutes, I’ve devoted my career to investigative journalism and storytelling. I started this job excited to collaborate and to benefit from the wisdom and experience of the 60 Minutes veterans, with you among them. For that reason, one of the first things I did in my new role was call you to talk and invite you to dinner. It is a profound disappointment that you rejected that overture and chose ambush instead. Yesterday, you hijacked my first meeting with staff to disparage me, my qualifications, and my intentions with remarkable incivility and contempt. I welcome a diversity of viewpoints and respectful debate among the team, but this was nothing of the sort. Yesterday’s performative display of hostility enacted in front of the staff instead of in a civil, private conversation-demonstrated that you have no interest in contributing to the future success of the show, or approaching my new tenure with a mind open to collaboration and progress. I am here to deliver first-in-class news programming, not to make headlines about newsroom drama. I am eager to work alongside those who share this goal.

Despite yesterday’s misconduct, I had hoped that in sitting down with you today we could find a path forward together. You made clear that you are not interested in such a path.

Your antipathy to the future of the show has come through loud and clear. And I have heard you. I therefore write on behalf of CBS News, Inc. (“CBS”) to inform you that your employment with CBS is terminated for cause effective immediately. Enclosed is your formal termination letter.

Sincerely,

Nick Bilton

Executive Producer, 60 Minutes

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Aspiration co-founder sentenced to 14 years for fraud

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Aspiration co-founder sentenced to 14 years for fraud

The co-founder of Aspiration, Joseph Sanberg, was sentenced to 14 years in prison on Monday after defrauding investors and lenders of over $248 million.

The startup, an eco-friendly digital banking company boasting fossil fuel-free investments, carbon offsets for gas purchases, and a debit card with cash-back benefits for shopping at clean companies, was founded by Sanberg and Andrei Cherny. Cherny left the company in 2022 and has not been charged.

Sanberg, an Orange County native, pleaded guilty to wire fraud in October after being arrested in March last year. Aspiration subsequently filed for bankruptcy and liquidated all of its assets by July.

Sanberg and venture capitalist Ibrahim AlHusseini, who also faces charges, together forged a series of bank statements in order to obtain loans. From 2020 to 2021, the pair forged AlHusseini’s bank statements to show millions of dollars in assets in order to obtain millions of dollars from lenders.

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Additionally, they forged a letter from their audit committee stating that $250 million in funds were available, when in reality Aspiration had less than $1 million. The amount of loans defrauded exceeded $248 million.

In 2021, Sanberg artificially inflated Aspiration’s 2021 revenue by $44 million by recruiting 27 fake customers to sign letters of intent pledging tens of thousands of dollars per month for tree planting services. Sanberg himself funded the contracts and used the inflated revenue numbers to obtain more loans.

The charges sparked an NBA investigation into salary cap allegations due to Aspiration’s connections with Clippers owner Steve Ballmer.

Ballmer personally invested $60 million in Aspiration, all of which was lost. He is now the target of a civil lawsuit alleging his participation in the scheme. Ballmer denies the allegations.

The team announced a $300-million sponsorship deal with Aspiration, and Clippers player Kawhi Leonard signed a four-year, $28-million marketing contract with the company, which reportedly performed no duties. The issue has raised concerns about how players are circumventing the NBA’s salary cap.

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The team lost the $300-million sponsorship deal and an additional $20 million paid for carbon offset purchases.

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