Unless you are brand new to the investing world, I’m guessing you have heard all about what meme stocks are. To recap, they are companies who generally have a high level of short interest in them making them subject to what is known as short-selling; when someone bets that a company’s share price will fall so they borrow these shares at a higher rate, sell them, and then buy them back at a reduced price to return to the owner.
However, a group of investors using social media platforms like Reddit caught on to this and realized that if they bought stocks with high levels of short interest in large quantities, short traders would have to invest more to cover their losses. This would result in the share price skyrocketing offering the potential of making money. Their first target was GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC).
Meme stocks are flying
This saga has been going on all year, but GameStop had a particularly good rally last week, surging 24%. However, this figure was nothing compared to the gains the gaming stock had since January though, with the stock up 1,112% since then.
But there is a stock hot on GameStop’s tail.
Is Support.com the next big meme stock?
Support.com (NASDAQ: SPRT) shares are up almost 400% this month as the Reddit crowd piled into the stock. For the year, Support.com stock is up 1,561% putting it above GameStop’s rise of 1,112%. Shockingly, the company has made it to the number two spot amid all the stocks in S&P 1500 and S&P Completion indexes this year.
If it continues this upward trend, it might even take the top spot from meme stock king AMC Entertainment.
What is Support.com?
Support.com is a small technical support company for businesses and consumers. Headquartered in Delaware, the company helps employees who work remotely with tech support.
Support.com’s market cap is $882 million and before the meme stock surge, the company wasn’t even on Wall Street’s radar so there are no revenue or earnings estimates made for the firm.
At the end of the last quarter in June, Support.com posted total assets of $46 million, a net loss of $799,000, on sales of almost $8 million.
Should you buy Support.com stock?
If the market was not going through a meme stock rally, this stock would not be surging like it is right now. This is a pure risk play, as it is with many meme stocks. Be warned, just as the stock can shoot up all of a sudden, so too can it plunge when people take their profits.
Investors are simply buying this stock in the hopes to make a quick buck, and if you want to do the same, be prepared for some extreme volatility. With roughly 25% of Support.com’s shares still owned by short sellers, expect this company to ride the meme stock wave for a long time.
If you are looking for stocks with true, long-term potential, why not check out MyWallSt’s full list of high-growth stocks by starting your free access now?
Financial Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.