Tech analyst sounds the alarm on meme stock mania

The Street

Daniel Newman, CEO, Futurum Group, explains what surging meme stocks really says about the market.

Transcript

00:00Danny, I want to ask you about meme stock mania. We're seeing a lot of interest in meme stocks

00:04again. What do you make of that? And what does that tell you about the broader market?

00:09As technology research, we don't spend a ton of time here, but you can't ignore it. It's

00:15everywhere right now. Fintwit, you go on, you're seeing Opendoor, you're seeing Krispy Kreme.

00:20I think this is one of those sort of early alarm bells that we have maybe hit that sort of

00:26euphoria in some ways. People are looking for that. How do I make a trade and retire tomorrow?

00:32Big gambles, big bets. And we've seen the rug pulls that can kind of come with these things. We've

00:36seen it in crypto. We saw it the other day with Opendoor had that huge collapse. Someone got out

00:41on a massive block and the thing dropped like it was a parabolic decline that took place.

00:46And so, you know, I think that for investors, some of these are real companies. Some of these

00:52are just not great. I tend to always drive back to fundamentals. There are companies that lack

00:57fundamentals, but that are very investable. We talk about Palantir, we talk about Tesla,

01:01because there's really a thesis, there's a business, there's a future, there's a vision,

01:05and then there's donuts. And I just don't know if I'm an investor, if I'm going to suddenly get behind

01:11donuts. I believe a lot more in GLP-1. So if I'm looking across this, I'd probably get behind a

01:16HIMSS, which I am personally invested in, before I would get into a Krispy Kreme or an Opendoor.

01:21I mean, real estate is, we have high interest rates. We have inventory challenges right now.

01:27That business model is super fractured. And there's a reason it was trading under a dollar.

01:34Yes, low float. Retail can make a big impact. You know, you get Wall Street bets behind it.

01:39It can move a stock. We've seen it with GameStop. We've seen it before with AMC. But we also saw what

01:44happened in the end is AMC, you know, it had to run up and it had to run all the way back down. We've

01:50seen it with GameStop. It's constantly trying to find a pivot to something. And now it's

01:53trying to be micro strategy. I mean, it wants to make its money on owning crypto.

01:57But you mentioned it's ringing the alarm bells. What are those alarm bells warning of,

02:02that the market could be too frothy and nearing a top? What do you make of that?

02:06Well, we've run on incredibly high while there's still some structural issues in the

02:12macro economy. We still have questions about interest rates. We've got uncertainty in the Fed.

02:16We've got job numbers that are of concern. We've got AI potentially replacing and displacing jobs.

02:22We don't know what the future really looks like there. We've still got tariffs out there. I mean,

02:27I think that we've seen that some good deals are being made. And that I don't think the tariffs are

02:33much of a concern, but there's still a lot of unknowns as to what that is going to mean.

02:37And so when you put all these kind of macro factors together, together, and then you try to

02:42like place it over the backdrop of like, is a company that's maybe not growing, that doesn't

02:47have a lot of cash on the balance sheet, that maybe has a low float, is highly shorted. Is that where I

02:54want to chase money? And it feels to me like whether, you know, it's been some of these crypto rug

03:00polls or some of these companies, like someone will make a lot of money on this stuff. But I worry

03:04out there, if you're the investor, if you're the retail and you're sort of following this trend

03:08and you're coming in after these things have made 30 and 40 and 70 and a hundred percent rises,

03:14are you going to be one of those people that's left holding back? You know, they call them bag

03:17holders is the common fin twit term for it because the people that make the money often saw this stuff

03:22much earlier and they got in early and they've ridden that pair. And then someone's going to want to sell

03:27and get out because they know they didn't buy great companies. They were able to take advantage

03:31of sort of a technical inadequacy that exists inside of the structures of these companies and

03:36how their equities are traded. So it's just something I personally wouldn't get near. But it

03:41is worth noting there are retail names, and we truly believe this, that are great companies that

03:46retail has gotten behind and really helped propel. And like I said, I'm in HIMSS, great growth rates.

03:51I'm in SoFi, great growth rates. And retail loves it. They talk about it. These are real companies,

03:55real growth, real products, real services, and real fundamentals. So

04:00at your own risk and do your own research.

Category

Transcript

Recommended