Reddit became synonymous with the meme stock rally of 2021. Now, its stock has become a meme itself.
Reddit stock (RDDT) popped more than 12% on Tuesday and has rallied more than 30% since its initial public offering last Thursday. Some reports have pegged an uptick in options volume to the recent surge in shares.
The meme resurgence spans beyond one popular IPO. GameStop (GME), the original meme stock, just had its best one-day rise in a year. The Donald Trump-tied media SPAC finally debuted under the name Trump Media and Technology Group and ticker symbol DJT. That stock was up more than 50% during Tuesday’s trading session alone.
“We are in a very exuberant market,” Interactive Brokers chief strategist Steve Sosnick told Yahoo Finance. “We’re in a very momentum-driven market. One of the hallmarks of momentum is it becomes far less about fundamentals. It becomes all about price movement and much less about about valuation. Meme stocks are the epitome of that.”
Beyond those popular names, other signs of a risk-on market are flashing too.
Bitcoin (BTC-USD) has pressed near $71,000 per coin. MicroStrategy (MSTR), a stock that more closely follows the price of bitcoin than typical fundamental drivers like earnings, is now up more than 200% year to date after a massive rally on Monday.
And the commodities trade is ripping too, with gold (GC=F) up 7% in the last month and sitting near an all-time high. The price of cocoa (CC=F) has risen nearly 50% over the same time period.
To Charles Schwab chief investment strategist Liz Ann Sonders, these moves are signs of “froth” in the market.
“It’s sort of the bull market in everything theme recently with the exception of maybe bonds,” Sonders said. “It’s in crypto, it’s in precious metals, it’s in certain other commodities. It’s in some of the meme stocks, again, and it is [all part] of the mix.”
The big moves come as the broader market sits at all-time highs. The S&P 500 (^GSPC) has hit 20 all-time highs in less than three months of trading this year, putting it on pace for the most record closes in any year ever. The “straight up and to the right” nature of the benchmark’s rise over the last several months — it hasn’t produced a negative month since October 2023 — has had many asking if we’re in a stock market bubble that’s about to pop.
Many strategists have argued the answer is no.
In a research note on Monday, Deutsche Bank’s equity strategy team reasoned that the $260 billion that’s poured into equities since last May doesn’t indicate a peak in risk appetite. Instead, it’s been supported by an improving outlook for both the economy and earnings.
Deutsche Bank director of global asset allocation and US equity strategy Parag Thatte told Yahoo Finance the firm hasn’t seen flows data pick up purely because of risk appetite yet.
“If flows or positioning were to get to an extreme, it becomes an issue by itself, because people could get nervous holding extended positions when we’re at an extreme,” Thatte said.
“But because we’re not yet at those levels, what we would say is that you will need some sort of a negative catalyst in order for people to pull positions back.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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