By Medha Singh
(Reuters) – Shares of debt-ridden Tupperware Brands Corp and Yellow Corp have been on a tear as retail traders dip back into financially weak “meme stocks”.
U.S. trucking company Yellow’s shares jumped over 67% on Tuesday, after more than doubling in the previous session as the Teamsters Union said the firm had ceased operations and was filing for bankruptcy.
Tupperware Brands Corp, which has also warned of a possible bankruptcy amid a slump in sales, rose 29%, adding on to a 575% surge over the past seven sessions on no apparent reason.
“There is really no logic,” said Dan Raju, CEO of brokerage Tradier.
“Interest rate hikes tapering off pushes directional traders to jump back into the market, touch the social media echo chambers and they latch on to – generally what I call – unprofitable companies riddled with debt, creating these meme stock rallies.”
The resurgence in meme stocks, named so because their rallies were driven by hype on social media, comes alongside a broader rise in U.S. stocks on bets that interest rates had peaked and the economy would avoid a recession.
The surge in Tupperware and Yellow’s shares was reminiscent of stellar rallies in other struggling companies such as home goods seller Bed Bath & Beyond, nail polish maker Revlon and car rental company Hertz Corp.
Yellow was the most traded stock by retail investors at 11:30 a.m. ET on Tuesday, while Tupperware took the third spot, J.P. Morgan data showed.
Retail traders market orders made up 17.6% of total market flows on July 31, up from a near six-month low of 14.8% on July 20, according to J.P. Morgan data.
Roundhill’s Meme index hit a more than one-year high on Monday.
(Reporting by Medha Singh in Bengaluru; Editing by Devika Syamnath)
