Daniel Newman, CEO, Futurum Group, explains what surging meme stocks really says about the market.
Transcript:
CAROLINE WOODS: I want to ask you about meme stock mania. We’re seeing a lot of interest in meme stocks. Again, what do you make of that. And what does that tell you about the broader market?
DANIEL NEWMAN: Yeah as technology research, we don’t spend a ton of time here, but you can’t ignore it. It’s everywhere right now. Fintwit you go on, you’re seeing Opendoor, you’re seeing Krispy Kreme. I think this is one of those sort of early alarm bells that we have maybe hit that sort of euphoria. In some ways. People are looking for that. How do I make a trade and retire tomorrow. Big gambles, big bets. And we’ve seen the rug pulls that can kind of come with these things. We’ve seen it in crypto. We saw it the other day with Opendoor, had that huge collapse. Someone got out on a massive block and the thing dropped like it was a parabolic decline that took place. And so, you know, I think that for investors, some of these are real companies. Some of these are just not great. I tend to always drive back to fundamentals, like there are companies that lack fundamentals but that are very investable. We talk about Palantir. We talk about Tesla because there’s really a thesis. There’s a business, there’s a future, there’s a vision, and then there’s donuts. And I just don’t know if I’m an investor, if I’m going to suddenly get behind donuts. I believe a lot more in GLP 1. So if I’m looking across this, I’d probably get I’d get behind a HIMS before, which I am personally invested in before I would get into a Krispy Kreme or an open door. I mean, real estate is we have high interest rates, we have inventory challenges. Right now. That business model is super fractured. And there’s a reason. It was trading under dollar. Yes low float retail can make a big impact. You know you get Wall Street Bets behind it. It can move a stock. We’ve seen it with GameStop. We’ve seen it before with AMC. But we also saw what happened in the end is AMC. You know, it had the run up and it had the run all the way back down. We’ve seen it with GameStop. It’s constantly trying to find a pivot to something. And now it’s trying to be MicroStrategy. I mean, it wants to make its money on owning crypto.
CAROLINE WOODS: But you mentioned it’s ringing the alarm bells. What are those alarm bells warning of that the market could be too frothy and nearing a top? What do you make of that?
DANIEL NEWMAN: Well, we’ve run up incredibly high. While there’s still some structural issues in the macro economy, we still have questions about interest rates. We’ve got uncertainty in the Fed. We’ve got job numbers that are of concern. We’ve got AI potentially replacing and displacing jobs. We don’t know, the future really looks like there. We’ve still got tariffs out there. I mean I think that we’ve seen that some good deals are being made and that I don’t think the tariffs are much of a concern, but there’s still a lot of unknowns as to what that is going to mean. And so when you put all these kind of macro factors together together. And then you try to place it over the backdrop of like is a company that’s maybe not growing, that doesn’t have a lot of cash on the balance sheet that maybe has a low float, is highly shorted, has the like. Is that where I want to Chase money. And it feels to me like whether, you know, it’s been some of these crypto rug pulls or some of these companies, like someone will make a lot of money on this stuff. But I worry out there if you’re the investor, if you’re the retail and you’re sort of following this trend and you’re coming in after these things have made 30% and 40% and 70% and 100% rises, are you going to be one of those people that’s left holding back. You know, they call them bag holders as the common fintwit term for it, because the people that make the money often saw this stuff much earlier and they got in early and they’ve ridden that, and then someone’s going to want to sell and get out because they know they didn’t buy great companies. They were able to take advantage of a technical inadequacy that exists inside of the structures of these companies and how their equities are traded. So it’s just something I personally wouldn’t get near. But it is worth noting there are retail names. And we truly believe this, that are great companies that retail has gotten behind and really helped propel. And like I said, I’m in hymns. Great growth rates, I’m in SoFi, great growth rates and retail loves these. They talk about them. These are real companies, real growth, real products, real services and real fundamentals. So at your own risk and do your own research
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