U.S. economic portal ‘Yahoo Finance’ reported on the 7th (local time) that provincial bank stocks in the United States are turning into meme stocks (pandemic stocks) as they face a crisis.
Meme stocks refer to stocks that go viral online and attract ants (individual investors).
Meme stocks are stocks in which American ants gather in the Reddit Stock Room, a famous American SNS, to intensively buy or sell stocks that have gone viral. Accordingly, it is traded regardless of the company’s fundamentals.
The origin of meme stock was the game stop at the beginning of the year in 2021. BB&B, a bath products company that recently applied for bankruptcy protection following GameStop, was a representative meme stock.
Following this, local bank stocks are now becoming meme stocks. Until now, banking stocks have been evaluated as one of the most stable stocks as the financial infrastructure that supports the US economy.
However, as Silicon Valley Bank (SVB) virtually went bankrupt in March, more and more investors are short-selling provincial banks, and other provincial banks, which were stable, are also facing a crisis.
Wall Street experts are unanimous saying, “In the case of some banks, the fundamentals are good, but the current stock prices are out of line with the fundamentals and cannot be sustained, such as a sharp drop in stock prices due to bad word of mouth.”
The American Bankers Association has asked the Securities and Exchange Commission (SEC) to investigate, saying, “short selling of bank stocks and social media activity are out of touch with financial reality.”
“The SEC is the agency that investigates and prosecutes all forms of misconduct,” said SEC Chairman Gary Gensler, who “will investigate this closely.”
Experts are questioning the plunge in regional bank stocks last week. In particular, it is pointed out that it is highly irresponsible for the SEC to allow the Reddit Stock Room to be used as a conduit to spread misinformation about sound and profitable banks.
Experts are unanimous that the fact that banking stocks, once considered the most stable, have turned into meme stocks, overshadows the reputation of the United States as an advanced financial country.
Last week, America’s regional bank stocks rode a rollercoaster. Early in the week, most regional banks in the US plummeted. However, last weekend (5th), Pac West surged by 82%, Western Alliance by 49%, and Zeon by 19%.
The roller coaster ride of provincial bank stocks is conclusive evidence that they have already become meme stocks, Yahoo Finance said.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.