Meme Stocks Go For Wild Ride As Retail Traders Move On To New Targets

Plus, Bitcoin dropped as low as $31,035, Chipotle is raising menu prices as ingredients and labor costs rise, and Ferrari appointed a new CEO.

Stocks were higher at the open on Wednesday with the Dow adding just 26 points, or less than 0.1%. The S&P 500 rose by 0.1%, while the Nasdaq gained 0.4%.

The latest additions to the meme stock frenzy have whipsawed this morning. Clover Health was up nearly 27% at the open but is down more than 4% at the time of writing. Similarly, ContextLogic was up 26% at the open before slipping lower and currently is up just 3%. Wendy’s is down more than 9%, after gaining 26% yesterday, following a downgrade from Stifel. The retail crowd has moved on to Clean Energy Fuels, which is up 25.75% at the time of writing, and Geo Group, which is up 41%. “The meme stock craze is a liquidity phenomenon,” said Miller Tabak’s Matt Maley. 

Bitcoin has been on a wild ride as well. The world’s largest cryptocurrency is up 15% to $36,233 after falling as low as $31,035 earlier in the day. A break below $30,000 “could see a tremendous amount of momentum selling,” said Edward Moya, senior market analyst with Oanda Corp. Evercore technical strategist Rich Ross and Tallbacken Capital Advisors’ Michael Purves both said the $20,000 level as a possible key level if the coin breaks much lower. “How much lower can it go? Purves said in a note. “The most obvious answer continues to be a complete retracement of the breakout from $20,000 – in other words, back to $20,000.” In other crypto news, Interactive Brokers said it will begin allowing trading of cryptocurrencies on its platform by the end of the summer. “Customers certainly are asking for [crypto trading] and we expect to be ready to offer it to them by the end of the summer,” Interactive Brokers Chairman and CEO Thomas Peterffy said. “As for hurdles, the greatest hurdle is how do you keep your customers 100% safe. How do you make it 100% sure that no one will steal their coins in spite of the fact that they are untraceable. We will find out more about this when we open for business at the end of the summer.”

Chipotle has hiked its menu prices by around 4% to cover the cost of rising wages. The company said in May that it would raise hourly wages for its restaurant workers to an average of $15 an hour by the end of June. “It feels like the right thing, at the right time, and it feels like the industry is now going to have to either do something similar or play some kind of catch-up,” CFO Jack Hartung said. “Otherwise you’ll just lose the staffing gain.” CEO Brian Niccol said that while the company prefers not to raise prices, the move made sense now as ingredients and labor costs rise. 

Ferrari has appointed STMicroelectronics’ Benedetto Vigna as CEO as the carmaker gears up for the electric vehicle age. “We’re delighted to welcome Benedetto Vigna as our new Ferrari CEO,” said Ferrari Chairman John Elkann in a press release. “His deep understanding of the technologies driving much of the change in our industry, and his proven innovation, business-building and leadership skills, will further strengthen Ferrari and its unique store of passion and performance in the exciting era ahead.” Jefferies analyst Philippe Houchois said in a note, “The appointment is highly unexpected and, in our view, reflects the need to ‘reinvent’ Ferrari and the difficulty of securing candidates willing to take on the task.”

And Johnson & Johnson CEO Alex Gorsky said today that people will likely need to receive additional doses of the COVID-19 vaccines alongside the annual flu shot for the next “several years” until herd immunity is achieved on a global scale and variants are able to be kept at bay. “We could be looking at this tagging along with the flu shot, likely over the next several years,” Gorsky said. Gorsky’s comments come just a day after U.S. health officials urged Americans to get vaccinated against COVID to keep the Delta variant that was first identified in India from spreading across the country. 

Stocks We’re Watching

Chinook Therapeutics Inc (NASDAQ: KDNY): Chinook Therapeutics announced yesterday the presentation of data from the ongoing phase 1/2 study of BION-1301 in patients with IgAN at the 58th European Renal Association – European Dialysis and Transplant Association Virtual Congress. “We are encouraged by the data we have generated to date for BION-1301 in patients with IgAN, including the clinically meaningful reductions in proteinuria observed, as well as safety, tolerability, PK and mechanistic biomarker responses,” said Alan Glicklich, M.D., chief medical officer of Chinook Therapeutics. “The data generated thus far have reaffirmed our belief that blocking and neutralizing APRIL in patients with IgAN plays a key role in depleting pathogenic Gd-IgA1 and reducing proteinuria, demonstrating strong rationale for BION-1301’s disease-modifying mechanism of action in IgAN.”

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