Dogecoin s social media-driven 13,000% rally looks a lot like the GameStop saga. Experts explain why May 07, 2021, 06:21 AM
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Dogecoin s red-hot rally is reminding people of January s GameStop saga.
Experts say it is similarly social media- and celebrity-driven, with few fundamental factors.
They say investors and day traders should be cautious around the new meme investing culture.
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Dogecoin s red-hot rally over the last few days has shocked traditional investors and has been driven on by social media hype and celebrity endorsements.
Sound familiar?
Many investors are comparing dogecoin s meteoric rise to the GameStop saga that gripped the financial world in January.
Then, the unloved shares of a brick-and-mortar video game retailer surged when day traders organising themselves on Reddit got behind it, to the dismay of hedge funds who had been betting against the stock.
Share:
Roblox Corp (NYSE: RBLX) Friday on CNBC s Trading Nation.
Roblox is essentially crack for kids, Shay said.
The newest stocks on the block are set to report next week. @traderDanielle and Craig Johnson of Piper Sandler share which they re watching $DASH$BMBL$ABNB$COIN$POSH$RBLX$PLTRpic.twitter.com/fg42NGTLDY
Although she noted that the company s business model is a little bit questionable, it s very lucrative.
Upcoming Earnings: Roblox is scheduled to report first-quarter financial results on May 10.
Shay expects the stock to move about $8 one way or the other after the company reports earnings. If it pulls back, Shay would be a buyer of the stock, she told CNBC.
EBay s post-earnings drop, for one, is a great reason to buy the stock, said Danielle Shay, director of options at Simpler Trading. This is a really good company. They ve seen amazing growth throughout the pandemic, Shay said. While they re trying to be cautious for next quarter, I do think that people are going to continue to buy online.
With the stock now down near its 200-day moving average just above $55, Shay said options traders could sell some put credit spreads, sell some naked puts or simply pick up the stock at these levels. I m looking for it to actually do really well next quarter, she said. EBay s my pick here and I m sticking with online shopping.
In an interview Friday with CNBC s Trading Nation, Craig Johnson, senior technical research analyst at Piper Sandler, said the group s charts told a positive story. I think the charts are telling us a very bullish message at this point in time, Johnson said, pointing to the Energy Select Sector SPDR Fund (XLE), which tracks the group.
He added that Exxon Mobil, the fund s largest holding, was close to reversing a longer-term downtrend. This is a stock that looks like it s got more room to run and a sector that looks quite positive, he said.
However, many money managers tend to disregard the sector because it makes up only about 3% of the entire market for stocks above a $25 million market cap, Johnson said.