The shares of Beyond Meat rallied more than 1,000 percent in just five sessions between October 16 and October 22. The new meme stock saw its market capitalisation surge from $200 million to a whopping $3.5 billion in a span of just six days.
The stock hit a high of $7.69 per share on Nasdaq on October 22 (Wednesday), marking a 1,047 percent increase from the closing price of $0.67 apiece, recorded just five trading sessions back on October 15.
The stock then saw some correction, falling more than 1 percent to close at $3.58 apiece on October 22.
What is a meme stock?
Unlike meme coins such like Dogecoin or Shiba Inu, which are a parody of other tokens and are believed to hold no intrinsic value, meme stocks are real companies with real businesses. A meme stock is largely inflated by retail sentiment, as investors mostly invest in the stock looking at its hype in the stock markets, not financials or performance.
Meme stocks received the name because their explosion in trading volume stems from interest and promotion on social media. These stocks are highly shorted shares and see significant volatility. With short interest at about 81.8 percent of its free-float, Beyond Meat is one of the most shorted stocks in the market, according to data quoted by Reuters from analytics firm Ortex.
What sent Beyond Meat's meme stock soaring?
The sudden rise in interest in Beyond Meat’s meme stock was driven by several factors. Roundhill Investments on Monday said that it has added the shares to its Roundhill Meme Stock ETF. Later on Tuesday, the company announced that it is increasing the availability of some of its products at Walmart stores in US.
Beyond Meat produces and sells plant-based meat, including plant-based burgers, beef, sausage, chicken and more.
"Loss-making, heavily shorted, meme-able ticker and easy to understand, the classic meme cocktail. Beyond Meat now has hundreds of mentions across retail channels. Whether this goes to infinity and Beyond Meat or just serves up another slice of fake-meat humble pie," Reuters quoted Ivan Cosovic, managing director of Germany-based data group Breakout Point, as saying.
(With inputs from agencies).
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