JPMorgan is highlighting a fresh batch of “meme stocks” that could be ripe for sudden swings as retail investors and hedge funds pile in from opposite sides of the trade. The Wall Street firm identified four stocks that are drawing heavy attention on social media, with retail investors showing strong buying interest. These names also have elevated short interest from hedge funds’ bearish bets. “We are flagging a few stocks that are heavily mentioned on Social Media and have high Retail buying as well as high Hedge fund Shorting,” JPMorgan said in a note to clients. “These stocks may experience unexpected flows in case of increased activity.” These meme candidates are: Hims & Hers Health , ImmunityBio , Rocket Companies and SoundHound AI . Speculation has resurfaced on Wall Street over the past few months as day traders touted various targets with the backdrop of a bullish stock market magnifying the effect. It’s no longer GameStop or AMC that retail traders are flocking to these days. Opendoor , Kohl’s , GoPro and doughnut maker Krispy Kreme are the latest to be the center of attention. In order to sell short, hedge funds borrow the security they’re betting against from a bank and sell it. Then, as the security decreases in price from where they sold it, they buy it back more cheaply and return it to the bank, profiting from the difference. But sometimes that can backfire. As stocks rise on the back of retail buying, hedge funds can be forced to buy back their borrowed stocks rapidly in order to limit their losses, a Wall Street phenomenon known as a short squeeze. If the bull market keeps chugging along, these speculative corners of the market flagged by JPMorgan may attract even more attention. Hims & Hers Health shares took a beating last month after the company reported second-quarter results that missed Wall Street’s expectations for revenue. Also, obesity drug maker Novo Nordisk has been challenging Hims & Hers’ practice of selling compounded versions of its lucrative drug. Rocket Companies, a mortgage fintech firm, hit a fresh 52-week high Thursday after Bank of America upgraded the stock to a buy rating from neutral. The firm said Rocket could be a strong beneficiary of rate cuts.
