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Bloomberg
Vaccine developers, electric-vehicle startups and a bankrupt car-rental company captured the imagination of individual investors in 2020 as Reddit chat rooms touted the so-called meme stocks as the next big winners.
The wild swings reflected bets by individuals, many of them new to the market, who looked to brokerage apps like Robinhood Markets to pass the time during the pandemic, especially after cashing stimulus checks. However, many trades weren’t based on companies’ financials, but rather on alluring products or stories circulated through memes online by other traders. As a result, some bets turned out better than others.
Hertz Global Holdings Inc. became one of the first household names to file for bankruptcy after the coronavirus outbreak sent demand for rental cars plummeting in the wake of travel restrictions and shutdowns around the world.
The shares fall as low as 40 cents. And then something odd happened. Trading volume spiked and hordes of investors — possibly looking for a cheap way to buy the dip — piled into the virtually worthless stock, driving it up more than
10-fold at one point.
Investors in Eastman Kodak Co. experienced euphoria that lasted just a matter of days after the 132-year-old company said it would begin manufacturing Covid-19 drug ingredients. The storied photography giant was the recipient of a $765 million government loan from the Trump administration in an attempt to speed production of critical medicines.
The stock surged 1,481% over the course of three days in July as investors cheered yet another attempt by the company to reinvent itself. But within a week, Senator Elizabeth Warren called for an investigation into potential insider trading. The shares collapsed as critics began to question why the loan was issued to the company, and
it was put on hold pending
further investigation.
Once called “more of a business plan than business†by a Wall Street analyst, electric-truck startup Nikola Corp. is emblematic of the speculative trading that sent EV stocks surging this year.
After going public in a reverse merger with a blank-check entity in June, Nikola commanded a market capitalisation of nearly $29 billion, topping even Ford Motor Co. However, the post-IPO euphoria did not last as billions were gradually trimmed from its valuation over the next two months.
Vaccine developers — including those that have never had a commercial product and have no revenue — had perhaps their best year ever as the biotech sector raced to develop
inoculations for Covid-19.
Leading the pack was Novavax Inc., which saw its stock skyrocket 4,385% by mid-August, before it had even started the late-stage trials needed to secure regulatory approval.