On May 12, 2024, the internet cheered as the man credited with launching the GameStop (NYSE:GME) short squeeze of 2021 returned to social media. Keith Gill, better known by the online alias “Roaring Kitty,” randomly shared a drawing of a gamer on X after a multi-year hiatus from the platform. The post did not have much context, but it quickly sparked a meme stock trading frenzy, sending favorites such as GME and AMC Entertainment (NYSE:AMC) into the green.
A week later, the meme stock rally has died off, but some lesser-known companies are still rising. If we assess this by progress alone, the winner of the Roaring Kitty rally isn’t GameStop or AMC. It’s Faraday Future Intelligent Electric (NYSE:FFIE), an electric vehicle (EV) producer that many investors have written off. But FFIE stock has been rising all week, and despite some dips, it has surged by truly impressive amounts.
Keep an Eye on FFIE Stock
In an era when seemingly random companies can surge on unexpected meme stock momentum, whenever a new one arises, it’s best to approach with caution. For all the excitement that erupts when a failing, heavily shorted company starts to surge, the momentum rarely lasts, as the Roaring Kitty rally recently reminded investors. This week, GME stock is back in the red, and AMC is struggling to stay in the green. But FFIE stock is still surging. Even with some volatility, it is up more than 45% for the day.
That’s a pretty good day for any stock, and it’s only half over. But to really highlight the difference between this new meme stock and the old r/WallStreetBets favorites, let’s take a look at their performances over the past five days. Despite the many retail investors who pounded the table over a short squeeze early last week, GME and AMC are down 70% and 62%, respectively, for the past five days. But Faraday Future is up almost 1,300% for the same period. Talk about a stark contrast.
It’s true that FFIE stock still trades at only $1.40 per share. But when we consider the fact that it began May 2024 trading at $0.050, it’s hard not to be impressed by this performance. While most other meme stocks were running out of momentum last week, Faraday Future kept climbing, beating the inevitable meme stock slump. Now we’re in a new week and it still shows no signs of slowing down.
The Road Ahead
How high can FFIE stock go? At this point, it’s difficult to predict precisely how much room to run it has. But now the momentum from the Roaring Kitty rally has died down, and this new meme stock is still rising. That suggests that Faraday Future may have growth potential beyond the short squeeze. And despite all its growth, it still trades at a low enough price point that many investors may see it as being worth a gamble simply based on its recent performance.
Additionally, unlike GameStop and AMC, Faraday doesn’t operate in a dying industry. As The Economist reports, the only future for the movie theater industry lies in creating a more luxurious experience for consumers. That means a bright future for a company like IMAX Corporation (NYSE:IMAX) but a bleak one for AMC, a company in which even retail investors are losing interest. And GameStop, at its core, is still only a plastic disc retail operating in a troubled industry that is becoming hard to navigate. But the EV market is primed for a rebound, which could help take FFIE stock higher in the coming months.
Most meme stocks have no real growth potential and only rise when a flash-in-the-pan rally strikes. But in the case of FFIE, investors may actually have a struggling company that is worth resurrecting.
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On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
