U.S. markets closed higher for the third straight day on Wednesday. The gains were modest, but welcome nonetheless. Trading in Thursday’s premarket session, however, gave back all of the S&P 500’s and more than all the Dow Jones industrial average’s Wednesday gains and about half of the Nasdaq’s gain Wednesday of 0.6%. Crude oil traded down about 1.4% at around $71.40 a barrel Thursday morning, and Bitcoin traded down about 2.5% at around $49,400. Unsurprisingly, 10-year Treasury note yields were down about four basis points at around 1.49%.
Wednesday marked the launch of the Roundhill Meme Stock ETF (NYSEAMERICAN: MEME), which Roundhill claims is the first global ETF “explicitly designed to track the performance of meme stocks.” The fund tracks the performance of the Solactive Roundhill Meme Stock Index that comprises 25 equal-weighted U.S.-listed equities “that exhibit a combination of elevated social media activity and high short interest.” The index is rebalanced every two weeks.
On its first day of trading, the Meme ETF opened at $15.58 and closed up about 5.3% at $16.40. Just under 80,000 shares were traded Wednesday. The fund’s top 10 holdings, accounting for about 43% of the fund’s investments, are:
- Digital World Acquisition (5.35%)
- Roku (4.58%)
- DraftKings (4.33%)
- ContextLogic (4.24%)
- Snap (4.2%)
- Upstart (4.16%)
- SoFi (4.11%)
- AMC (4.10%)
- Teladoc (4.06%)
- Robinhood (4.05%)
It could be that believers in GameStop Corp. (NYSE: GME) are getting a little tired of waiting for the company to reveal its secret plan to show it is worth its elevated share price. The per-share loss of $1.39 was far higher than the pre-report estimate of $0.52, while revenue of $1.3 billion was up 29% year over year and beat the consensus estimate of $1.19 billion. But the company took no questions (again) on its conference call, and CEO Matt Furlong told investors that GameStop will focus on revenue growth and market leadership. Over time, Furlong said, “scale and market leadership will translate to greater free cash flows.” Investors shaved about 2.3% from the share price on Wednesday and had taken another 5% off in Thursday’s premarket to trade at $165.00.
Wednesday’s big winners were two fintech stocks, which both posted double-digit gains for the day. Bakkt Holdings Inc. (NYSE: BKKT) closed with a gain of 29.8% to $17.14, after touching an intraday high of $18.32. The company had no specific news, but as we noted in Wednesday’s midday report, Visa has launched a service similar to Bakkt’s, adding some luster to the business model. Unfortunately, Visa is also an 800-pound gorilla and could put some serious hurt on Bakkt. That was the view that appeared to be prevailing Thursday morning. Shares dropped about 11% in the premarket session.
Wednesday’s other double-digit winner was Paysafe Ltd. (NYSE: PSFE). Shares added about 17.6% following an announcement of insider open-market stock purchases totaling about $2.8 million. Insider purchases are far more noteworthy than insider sales. Paysafe’s stock traded flat in Thursday’s premarket.
Other ways to lower a stock’s price are to issue more shares or, as Lucid Group Inc. (NASDAQ: LCID) announced late Wednesday, to sell convertible senior notes. The electric vehicle maker said it would issue $1.75 billion in five-year notes in a private offering to “persons reasonably believed to be qualified institutional buyers.” An option on another $262.5 million is available for 13 days from the date the notes are issued. Lucid can buy them back under certain conditions on or after December 24, 2024. Lucid’s stock, which gained 1.9% on Wednesday, traded down about 7.4% in Thursday’s premarket to $41.43.