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Should you ever find yourself researching a couple of meme stocks du jour for a long article, plan accordingly. Block out 48 hours – ideally a weekend – and get in the snacks. Warn your significant other you won’t be showering. Type like fury.

When I decided a fortnight ago that the more-or-less mutual debuts of Trump Media & Technology Group (Ticker: DJT) and Reddit (Ticker: RDDT) on the New York Stock Exchange could make for an interesting Moguls post, I didn’t expect a quiet life.

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  • 1 Delta Hedge April 4, 2024, 2:09 pm

    @TI. Brilliant piece as always. 🙂

    Perhaps Monevator should IPO under the ticker ‘FIRE’ 😉 You’ve got a broad moat (UK’s only weekly content FI site AFAIK, and a 17 year record) with a huge Total Addressable Market. You’d be way ahead of where, say, NKLA was in 2020, when it exceeded the market the caps of Ford and GM, despite not having produced a single vehicle at that time, and with all of its Q2 revenue that year ($36k) coming from installing solar panels at the home of its Executive Chairman.

    @All: in case your interested, there’s some back and forth on MSTR on the first BTC related Monevator piece (December 2017) over here (see comments #58-71):


    Do check out the Zack Morris’ piece on LinkedIn as well as on his Substack, as it’s there that he addresses a technical objection to his MSTR to the moon thesis.

    FWIW, I think that the drawback with RDDT, as compared to either DJT or to MSTR, is that it is at least somewhat tethered by conventional metrics (Daily Active Users, Price/Sales, etc).

    Obviously, the specific problem for an outsider investor in DJT is that the IPO is effectively a single company double SPAC with a cross over between the sell and buy sides.

  • 2 The Investor April 5, 2024, 11:39 am

    @Delta Hedge — Thanks for getting in with getting the comments rolling as always. I do agree that Reddit is less ‘memey’ than Trump Media, on the grounds that it has earnings, a business model, and a sensible valuation, and hence whatever ‘meme’ factor is currently in the price it must be a fraction of that which constitutes the ludicrous (by conventional metrics) valuation of Trump Media.

    The one caveat is as I said near the top, reflexivity works in markets. If Trump Media can parlay its stock into a great acquisition then, in a weird laws-of-physics-defying bit of time travel, today’s valuation might be seen to be justified. Well, maybe. (In reality it’d probably then crash to earth for being valued as a convention company).

    To be clear I think it’s more like DJT goes to zero in the long run than it sustainably goes to say $10bn, but it could certainly touch $10bn on the way.

    But what do I know about profitless, SALES-less meme stocks. Beginner’s mind here. 😉

    Re: a float, funnily enough a friend did suggest we Crowdfund the Monevator business in 2021 on Seedrs or Crowdcube and then use the proceeds to ramp-up editorial, redesign the site, invest in membership architecture and so on.

    There were many reasons why I thought this was a bad idea, but our puny profits — especially at the time — topped the list. Maybe Trump has shown me I was too timid on that score… 😉

  • 3 ermine April 5, 2024, 3:49 pm

    > 17 year record

    Wow. Monevator is soon to come of age – that’s worth a celebration in itself!

  • 4 Delta Hedge April 12, 2024, 9:16 am

    A few days on since publication now, and this Moguls’ article isn’t quite getting all the comment love which it deserves; so I hope that I may be permitted a longer second take (and with my apols when doing so for the couple of typos/grammar slips in my first comment above, and I’m afraid they’ll be some typos I’ve missed in this one too).

    IMHO there’s two pressing questions with meme investing, namely:
    – Should we ignore it, as aspirant ‘sensible’ investor types?
    – Regardless, what difference will meme investing actually make, i.e. is it here to stay and, if so, then will it produce lasting and material structural changes to the global capital markets?

    With a hat tip to Monevator’s 16 March weekend reading list (https://monevator.com/weekend-reading-is-that-a-billion-pound-bazooka-in-your-pocket-scottish-mortgage/); Travis Kling over at ‘epsilon theory’ and Nick Maggiulli at ‘Of Dollars and Data’ separately hit the spot recently in identifying the causes and consequences of meme based investing:



    For many, especially in the US, meme stocks and meme crypto are the new lottery tickets.

    Cyberspace has enabled a new form of gambling. But one that is more social (or parasocial), collective and coordinated.

    Choose the right stock or coin early enough and you get a shot out of poverty.

    Choose the wrong one, or be late, and you get to be a bag holder or rug pulled.

    But, in either outcome, you get to join a tribe (e.g. MAGA Trumpers for DJT, or the self styled ‘SHIB Army’ say in the crypto space).

    It’s a form of identity politics-based gambling whose increased influence is prefigured somewhat by the rise in the popularity of gambling generally, and with gambling’s greater associations with the investing economics of desperation. For example, stateside, each 10% decrease in income is associated with a 4% increase in lottery spending. Based upon the data from 24 State Lottery Commissions and the US Census Bureau, at 2022 prices:
    – In 2019, in the poorest 1% of US zip codes that had lottery retailers, the average adult spent around $600 per a year on lotteries (i.e. ~$1,200 per household), or nearly 5% of those households’ incomes (of $25,000 each on average). In 2021 that rose to $700 per adult ($1,400 per household) for the poorest 1%.
    – That compares with just $150 per adult ($300 per household) in each of 2019 and 2021, or less than 0.15% of household income ($225,000), for those in the richest 1% of zip codes with a lottery retailer located in the area. The poorest households spend more than 30 times the percentage of their income on lotteries than richer ones with access to lottery retailers. And this drastically understates the difference. The figures are only for zip codes with lottery retailers. Why have a lottery ticket retailer if there are insufficient sales per head, as there are for the areas with the wealthiest households? Hence, in 2023, to join the top 1% of US households by income an individual would need to earn an average income of $407,500 per year and a household would need a threshold income of $591,550 (not $225,000).

    As the linked to John Rekenthaler FT piece on DJT (“Trump Media isn’t a Meme Stock, it’s a Cryptocurrency”) discusses, the boundaries between speculative meme stocks and cryptos are becoming blurred, as both serve to function as a similarly effective forms of wealth transfer from the desperate towards the pockets of the founders, owners and originators, the insiders and the early adopters.

    Sadly, none of this going away anytime soon.

    It’s becoming part of a new investment reality, and it is a likely going to become an enduring feature of that landscape.

    Whilst, as @TI alludes to, story stocks have been around since the invention of the stock market in Amsterdam in the seventeenth century (the Dutch East India Company) with a lineage stretching from the South Sea and Mississippi Companies in the eighteenth century, via the Railway Mania of the 1840s, through to the Radio Corporation of America led boom in the 1920s and to the Nifty Fifty stocks of the late 1960s and early 1970s; the internet generally, and social media in particular, turbo charges, optimises and entrenches the hype cycle in a way that is both more persuasive and more pervasive than any previous (less interactive) media (like TV, radio, magazines and newspapers) could manage. Bubbles will likely happened more frequently in the future, and will probably reach ever greater extremes of participation. They may even last longer and, in doing so, in a sense realise, albeit in different form, Yale economist Irving Fisher’s misplaced prediction of storied stocks reaching a permanently high plateau in 1929.

    The collective hallucination of cyberspace around meme stocks and coins could create it’s own reality, and defy investing gravity with ever greater boldness. The more widespread the illusion becomes, the more people will want to believe it is true.

    I’m assuming most Monevator readers will typically be passive (index tracker) types (like me). In principle, they could just ignore meme investing entirely and stick to broad market trackers.

    And, for factor aficionados, its not clear if meme investing helps or hinders.

    As @TI’s link to the FT’s ‘Momo goes vertical’ piece indicates, of all the Fama-French factors impacted by memes, momentum is perhaps the most (and most obviously) ‘in play’.

    However, whilst there’s a ‘cultural momentum’ aspect to meme investing, as displayed through its speed and reach of social media dissemination, this may not map well to either traditional price momentum (i.e. with 12-1, 6-1 or or 3-1 months’ momentum) or to conventional measures of price trend (i.e. 50 and 200 Day Moving Averages).

    The momentum in memes is faster, more volatile and less predictive. The trends take a shorter time to establish, are harder to ride, and are maybe less tradable.

    On the whole, and counterintuitively, perhaps meme investing helps value and quality investment (a little bit) as less money going into them, and more into meme stocks, should help the returns to each factor (investment flows being perhaps somewhat negatively correlated to longer term returns).

    OTOH, a case can be made for using the single ‘bet’ Kelly criteria to size up small strategic punts on certain meme investments where the return profile is convex.

    Regimes of momentum and mean reversion connect to how the meme phenomenon takes place and how much of its potential returns can be systematically realised.

    So if a meme stock or crypto has a 99% chance of going to zero and a 1% chance of going up between 1,000 and 10,000 times then Kelly says to bet between (at the risk of over exactness) 0.901% and 0.9901% of bankroll.

    Follow Kelly, and if you manage to get both the unknowable odds of winning and of payout ratios right, then you won’t exhaust your bankroll before hitting on a winner.

    Of course, Kelly just sets the upper bound for position sizing in this sort of super speculative meme stock (or coin) world.

    One doesn’t have to go ‘full Kelly’ and can adjust down for circumstances including risk aversion.

    Where the actual odds and win payouts are, as here with meme stocks, wholly unknowable (both retrospectively and, obviously, prospectively), then it makes good sense to discount the raw Kelly figure substantially, after first undertaking a best, conservative guess of those odds (the win rate) and returns (effectively the win payout); and to also assume that a loss would mean a complete loss of any and all capital put into a meme based investment (i.e. therefore to use the ‘betting Kelly’ formula).

    If the largest total loss of capital in meme stocks and coins that one can stomach (without anxiety, and with no more than mild irritation) is just 50 bps of available investment capital then, regardless of any larger result which the Kelly betting formula may give, 0.5% will become the ceiling (unless, of course, Kelly already has given a smaller position size).

  • 5 The Investor April 16, 2024, 12:16 pm

    Thanks for the kind words and long extra comment @Delta Hedge. I think I am going to have to try shorter Moguls pieces, the evidence is people are being overwhelmed by the info here. 🙂

    Anyway interesting to see Trump Media down 18% yesterday on news it is to allow existing holders to exercise their warrants:


    The stock is down about 43% since I wrote the above on 4 April. Still another 56% to go from that initial highwater level 😉

    If the company was actually raising money from this upcoming dilution, that would be (extremely mildly) bullish. As I say in the article, it should be issuing all the stock it can without cratering the price, at these levels.

    But judging by the CNBC article above it’s just a way for insiders to get mo’ money.

    Reddit down 14% or so over the same period. Meme stocks gonna meme stock I guess… 😉

  • 6 Delta Hedge April 29, 2024, 7:17 pm

    Another arguable meme stock disguised as something else; this one on even more egregious metrics than for Trump Media (although less entertaining) – a 1,900% premium to NAV 🙂


  • 7 Delta Hedge May 8, 2024, 8:09 pm

    RDDT results out yesterday – better than expected, but still big losses – shares up 15% on news:


  • 8 Delta Hedge May 13, 2024, 3:15 pm

    It’s started again! 2021 redux 😉 From investing.com today: “Shares of AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) have rallied premarket [GME is now up 82% after the open, and trading being halted] and many investors are wondering why. Some have speculated that Reddit (NYSE:RDDT)’s recent IPO ignited the rally, and while that may have helped GME shares’ recent run, there may be another reason for the strong move in both stocks premarket Monday. On X (formerly Twitter), a tweet from the account @TheRoaringKitty has been suggested as a reason for the premarket rally. Keith Gill, aka Roaring Kitty, heavily invested in GME throughout 2020, believing the company was undervalued. He shared his bullish thesis on Reddit’s WallStreetBets forum. During 2020 and 2021, meme stock mania resulted in GME and AMC hitting record highs as retail traders on the WallStreetBets Reddit, inspired by Gill’s confidence and fueled by social media, piled into GME en masse, sparking a buying frenzy. This squeezed hedge funds, which had heavily shorted the stock, leading to a dramatic rise in GME’s price. AMC, another heavily shorted stock, followed a similar trajectory, with its price soaring due to retail investor enthusiasm. GME shares have been rising significantly over the last month, up more than 60%. Now, the return of the RoaringKitty account, which tweeted for the first time in almost three years on Sunday evening, has coincided with the rise of both meme stocks once again, resulting in investors wondering whether meme stock mania could be back.” Crazy times again (?!)

  • 9 Delta Hedge May 14, 2024, 6:07 pm

    GME now up 300% in two days off the back of a tweet with circuit breakers triggered yet again today. Market cap now closing in on $13 bn for a P/E around 2,300x (P/S is a slightly more credible 2.6x). What’s more impressive is that in 2024 only 24% of the shares are sold short whereas it reached 140% in 2021 – don’t ask me how that’s possible 😉

  • 10 Delta Hedge May 27, 2024, 10:43 pm

    In case anyone’s interested: Trump Media & Technology Group lost $327 mn in Q1 24. Corresponding turnover?…$770,500. Active subscribers 113k.

  • 11 Delta Hedge June 4, 2024, 12:15 am

    They say that lightning doesn’t strike twice, but Keith Gill is going for 3 in a row (albeit after a hiatus since 2021):

    Completely nuts. Again, I’m surprised that this man’s social media activity can move the stock around quite this much when the short interest is ‘only’ 22% (as of 15th May 2024, according to Market Beat), against a ~140% peak in 2021 (due to naked shorts). Then again, volumes today were 974% average.