Phew, today was another eventful day on Wall Street. Even stocks continue to take off and retail investors are rallying behind a growing list of names. Cryptocurrencies have moved in the opposite direction, feeding off news of the Colonial Pipeline ransom and regulatory threats. So what else has the stock market done today?
- the S&P 500 closed up 0.02%
- the Dow Jones Industrial Average closed down 0.09%
- the Nasdaq Composite closing up 0.31%
Beyond these movements in the major indices, what else has the stock market done today? Here are some of the best stories.
What did the stock market do today? SPAC elevator.
Apparently every day the crowd of retail investors clings to a new theme.
From traditional nostalgic retailers to businesses targeted by short sellers like Hindenburg Research, Redditors are finding various ways to wage their war on Wall Street. Today, they have found a new opportunity in ad hoc acquisition companies. Specifically, they rallied to a a handful of de-SPAC actions with high short interest.
What does that mean? A share of-PSPC is a company that has already completed its reverse merger with a blank check company and has started trading independently. For example, Galactic Virgo (NYSE:SPCE) or Fisker (NYSE:RSF). Many of the biggest names in this group just had a quarter or two of reporting. Many are also still developing the products and services that they hope will make them profitable.
From the summer of 2020, SPACs and the businesses they launched on the public markets began to gain the attention of retail investors. Now, regulatory threats and changing sentiment weigh on PSPC’s actions. Influencers like Chamath Palihapitiya and Bill Ackman struggle to appease the retail crowd. Institutions also place bets against de-SPAC shares.
This makes these companies ideal targets for r / WallStreetBets and for retail investors in general. Names with higher short interests like Canou (NASDAQ:GOEV) and Skillz (NYSE:SKLZ) leading the way. Today, investors have clung to a larger group of names that includes Car lotz (NASDAQ:LOTZ) and Hyliion (NYSE:HYLN). With sentiment on the ever-changing subreddit, it looks like more of these-PSPC names could come to light in Wednesday’s exchanges.
Another story: Reddit isn’t the only thing to throw these names up. Sentiment has generally receded in favor of growth names in recent days. A preliminary list of additions to the Russell 3000 Index is also helpful.
Lordstown Motors needs more than memes
So we just said that SPAC shares and de-SPAC shares are skyrocketing thanks to the r / WallStreetBets crowd…
This may not be enough to lift all stocks, even in the short term. Lordstown Engines (NASDAQ:DRIVE) one of the popular stocks in question, just announced something that has caught the attention of investors. the electric vehicle start-up says it faces cash flow crisis. With that in mind, it issued a going concern warning in its quarterly update on Tuesday.
As a result, RIDE stock closed more than 16% lower and continues to sink in after-hours trading.
What’s the bottom line here? For companies like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC), retail investors provided a real lifeboat. These struggling businesses were able to avoid bankruptcy during the pandemic, leveraging the interests of retailers to raise funds and strengthen their balance sheets. Now, they continue to sell stocks, focusing on future growth opportunities.
GameStop in particular also took advantage of the Reddit hype and crafted a turnaround story around it. Activist investor and board member Ryan Cohen is expected to become president tomorrow, and the company is pivoting largely to technology and e-commerce. In fact, GameStop is said to be dabbling in the world of non-fungible tokens (NFTs), attracting its retail fans.
But as Lordstown Motors points out, these same factors won’t work for all businesses. Memes can be magical, sure, but they won’t solve everything.
A speculative bet on the reopening of the Covid-19
Hot Vax Summer is here, and consumers are ready to let go and break free from the restrictions of Covid-19. This manifests itself mainly in the desire to travel, especially as more and more countries are reopening their borders to vaccinated travelers.
With this in mind, many investors continue to bet on airline and cruise stocks. Specifically, Royal Caribbean (NYSE:RCL), Carnival (NYSE:CCL) and Norwegian Cruise Line (NYSE:NCLH) have been sparkling over the past few days. That’s because after many months with no cruises and no income, this trio is gearing up for a huge reopening rally. Royal Caribbean has just announced that it hopes to bring more ships online in time for this summer.
However, Tuesday highlighted an even more speculative bet on the history of the reopening of Covid-19.
Thai passenger air operator Nok Airlines (OTCMKTS:NOKPF) saw its OTC shares gain nearly 50% on Tuesday. The popular airline is known for its original branding… and for the difficult few months it has had. Despite efforts to straighten out its difficult financial situation, Covid-19 dealt a fatal blow to Nok Airlines. The company has filed for bankruptcy protection and has made efforts to maintain compliance with its home exchange.
Now it looks like investors are hanging on to the business as a high risk, high return game. With the threat of delisting seemingly in the rearview mirror, investor confidence is gaining in Nok Airlines. In addition, the company is expected to unveil its bankruptcy restructuring plan in just a few weeks.
This company is certainly not one to pay money lightly, but the massive rally in NOKPF shares is worth watching here.
As of the publication date, Sarah Smith does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com publishing guidelines.
Sarah Smith is Today’s Market Editor at InvestorPlace.com.