Can the meme stock trade maintain its momentum in 2024?

Shares of Chewy have been on the rise since Keith Gill, the GameStop (GME) meme trader more popularly known as “Roaring Kitty,” revealed he has a 6.6% stake in pet retailer Chewy (CHWY). Tastylive CEO Tom Sosnoff joins Market Domination to discuss the meme trade’s momentum.

“If you had told me three years later from 2021, we’d still be talking about this in 2024, I think I would be super surprised,” Sosnoff says. He calls Roaring Kitty an “extraordinary story for retail investors” as Gill made never-before-seen market moves in 2021. However, Sosnoff doubts whether the meme stock momentum this time around can be maintained.

Milwaukee-based headphone manufacturer Koss Corporation (KOSS) has been the latest recruit to this year’s meme stock craze as its stock has skyrocketed by over 210% in the past five trading days

For investors looking to get into the meme trade, Sosnoff is hesitant about stock options: “Even though these stocks are very liquid and even though they have a ton of trade, the markets aren’t great. They’re a little wide. And you have to be careful… because some of the upside call skew is ridiculous. And if you’re not used to upside call skew, it just means that calls are priced more expensive than the puts. And so it’s where the velocity of risk is deemed to be.”

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl

Video Transcript

Another eventful week for the meme trade roaring kitty revealing his 6.6% stake in Chewy and cost stock skyrocketing more than 100 and 40% on Wednesday.

So what’s next for meme stocks?

And what does it all mean for retail investors?

We’re bringing in just a man to talk about this tasty live ceo Tom sa for answers, Tom.

It is always good to see you, you know, big, big picture Tom in 2021 when I was talking about meme stocks.

I I don’t know if I would have thought skip ahead, you know, to July 2024 I’d still be talking about roaring Kitty and Dave Portnoy and meme stocks.

I mean, I, I guess I would have been surprised if you’ve told me that.

Are you surprised Tom that this is still a trend, a theme that we’re talking about?

Well, obviously, I, I think I’m in the same camp as you.

I, I would have been if you had told me three years later from 2021 we still be talking about this in 2024.

I think I would be super surprised.

But then again, ok, I’ll throw another angle at you.

Maybe just the term meme stock and it’s not just like the Gmes and the Chewy, you know, I mean, was NVIDIA meme stock, you know, for an institutional meme stock, I’m not sure if that’s just the new, the new term that may stick, you know, for anything that’s kind of, you know, out of control.

Story continues

So a problem of taxonomy.

All right, putting that aside for a second.

Uh I just, we’re just talking about uh with our uh head of news here that we got, we’re feeling 2021 vibes and stick with me.

We got these mega caps uh stocks, uh heavy concentration favoring uh just a handful of stocks.

And then out of the blue, we get this retail explosion in certain names.

We saw Games Stop and Keith Gill filing a 13 G. Now that’s, that’s a game changer too.

And Chuy, you see any sim any similarities here?

Well, of course, I mean, first of all, there, there’s two stories here.

The first story is the whole Keith Gill roaring kitty thing.

It’s, it’s an extraordinary story for retail investors because somebody did something incredible different than, than, than it’s ever been done before.

And I mean, not too many retail investors turned 50 million into some couple of 100 million.

God knows how much money he has, but it’s, it’s really never been done before.

So that in itself is an unbelievable story.

Um But the other side to it, I think is you, you bring up AAA great point, you know, I mean, what does this mean?

Is this a repeat of 2021?

Because if you remember we normalized in 2022 and it was a pretty dark year for the markets.

And I think you are seeing, you know, you may be seeing some capitulation upside capitulation.

You may be seeing kind of some euphoria that I don’t know if we can, you know, can we maintain these levels or will we normalize, especially in volatility, especially in all the indexes and everything else?

So, yeah, I’m gonna answer your question and say it’s a little like 2021 not as extreme but a little bit like it.

Tom.

I’m just curious for folks who are listening right now and they’re hearing us discussing, you know, uh Warren Kitty and the meme stocks and the moves and, and they wanna play it they want in Tom, what guidance would you give?

Is there any kind of just general um guidance, advice, tips and tricks?

Well, you know, at Tasty, we um you know, we’re like the third largest derivatives boutique.

So we, we um specialize in, in options when it comes to stocks like those, you know, most, most of our um customers and most of our trade center in the option marketplace and most people that trade things like Chewy and Gamestop and things that have, you know, let’s call these, these are pure asymmetrical plays.

Right.

You’re just, you know, you want to risk one to make 10 or something like that.

And so a lot of people use the option marketplace for that and I would just be careful in the sense that the markets in there, even though these stocks are very liquid and even though they have a ton of trade, the markets aren’t great, they’re a little wide and you have to be careful about, you know, you, you have to be careful because some of the upside call skew is ridiculous.

And if you’re not used to upside call skew, it just means that calls are priced more expensive than the puts.

And so it’s where the velocity of risk is deemed to be.

So that’s the only thing I would watch out for is just be careful about the upside call skew.

All right, we always appreciate a good risk management discussion.

Uh, give you the floor here.

Anything else you wanna tell investors could be about retail stocks?

Uh, just about anything.

Well, you know, as we wind down for kind of, I, I’m sure you guys are dealing with the same stuff we’re dealing with today.

It’s just a weird week.

You know, when you have a half day on Wednesday and a day off on Thursday, it’s kind of, it, it’s a, it’s a weird breakup but we haven’t, um, I don’t think we’ve experienced, you know, this kind, it’s been a long time since we haven’t seen it, you know, a downtick.

I think it’s been three, almost 350 days since we’ve had a 2% drawdown in the S and PS.

Um, and I, I think we’ve gotten to the point where, you know, we’re a little frothy as we like to say, the ducks are quacking.

So, just be careful.

All right, the ducks are quacking.

We’re gonna leave it on that note.

Thank you for the visual and the audio as well.

Tom Sazen off as always.

Thank you.

Have a great weekend guys.