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ASX Meme Stocks: Just how have they turned out for investors who took the plunge?
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ASX investors who took a bet on meme stocks experienced vastly differing returns but which stock they chose wasn’t the only factor determining how they went.
Research by Openmarkets group covering 11 “ASX meme stocks” found that investors over 40 experienced an average gain of 1.29% while investors under 40 experienced an average loss of 1.93%.
Openmarkets says this is because the younger traders were acting with a higher degree of risk. These stocks compromised 5.14% of their total trades while it was just 3.8% for older investors.
ASX meme stocks
Of course, the stock they chose was also a factor and both over and under 40s made individual gains and losses.
But just which companies are ASX meme stocks?
The research identified 11 of them: 88 Energy (ASX:88E), Creso Pharma (ASX:CPH), Douugh (ASX:DOU), Lake Resources (ASX:LKE), Brainchip (ASX:BRN), Vulcan Energy (ASX:VUL), Digital Wine Ventures (ASX:DW8), Zip Co (ASX:Z1P), Cirralto (ASX:CRO), Mesoblast (ASX:MSB) and Latin Resources (ASX:LRS).
It did not claim this to be an exhaustive list but searched Reddit, Twitter and trading-focused Facebook groups to find 11 of the “most interesting trending stocks” that came with rocketship emojis. It then cross-referenced the stocks with Google Trends to confirm they were genuinely trending.
From there, Openmarkets took an anonymised population of 600 customers – evenly split between over and under 40s – and crunched the numbers on when they bought and sold.
For over 40s, the highest average gain was on Digital Wine Ventures with 8.27% and the biggest loss was on Vulcan at 11%.
For under 40s, the biggest average gain was 88 Energy with an average gain of 26.59% and the biggest loss was on Lake at -15.67%.
| 41 and over | 40 and under | |
|---|---|---|
| Code | Av Return | Average Return |
| BRN | 5.02% | 11.16% |
| DW8 | 8.27% | -5.48% |
| DOU | 6.25% | 1.97% |
| 88E | 7.80% | 26.59% |
| VUL | -11% | -2.12% |
| LKE | -1% | -10.83% |
| MSB | -0.10% | -3.89% |
| CRO | 0.95% | -13.84% |
| LRS | -6.33% | -15.67% |
| CPH | 3.61% | -5.65% |
| Z1P | 0.73% | -3.52% |
| Average | 1.29% | -1.93% |
OpenMarkets CEO Ivan Tchourilov stressed the research didn’t necessarily say any of them were good or bad but it appeared irresponsible trading purely based on social media advice.
He also said it was a worrying trend amidst the anticipated transfer of wealth from Baby Boomers to Millennial and Gen Z investors.
“With all the hype around meme stocks, it is no surprise that the younger traders and investors are getting caught up and caught out,” Tchourilov said.
“We would advise caution, and for investors to research, seek professional advice, and gain experience before trying to time the market or make quick gains, especially in meme stocks.”
ASIC says it’s on the case
Openmarkets’ research came just one day after corporate regulator ASIC warned it was watching pump and dump schemes on social media.
It said such conduct could amount to market manipulation which could attract fines of over $1 million and 15 years imprisonment.
“ASIC has been working closely with market operators to identify and disrupt pump and dump campaigns, and we will continue to target actions that threaten the integrity of markets and to take enforcement action where appropriate,” said ASIC Commissioner Cathie Armour.
“We expect anyone involved in these campaigns to recognise the potential impact on market integrity and to be aware ASIC monitors all trading on the ASX equity market on a real time basis.”
The ASIC boss also said market participants and listed entities had to take active steps to identify and stop such misconduct.
“Market participants, as gatekeepers, should take active steps to identify and stop potential market misconduct. They should consider the circumstances of all orders that enter a market through their systems, and be aware of indicators of manipulative trading,” Armour said.
“Listed entities have a role to play in maintaining the integrity of our markets.
“They should report any suspicious activity they detect in their listed securities to the Australian Securities Exchange (ASX) or ASIC. This includes where there are sudden and unexplained price moves.”
