An ETF exclusively for meme stocks relaunched yesterday, like a phoenix rising from the ashes
The Roundhill Meme Stock ETF is back, in case you wanted a gut check for how much retail is in the driver’s seat for the market these days.
The actively managed ETF started trading under the ticker “MEME” Wednesday. It’s a relaunch of a product from Roundhill that opened in December 2021, the same year as the OG GameStop meme stock craze, before shuttering about two years later.
“There still remains a feeling among the Wall Street establishment that retail in aggregate, and especially the connectivity with meme stocks, is a non-serious endeavor,” Roundhill CEO Dave Mazza told Sherwood News. “But what we’ve learned, particularly in the post-Covid period and then into 2025, is that the power of retail investors across the broader market is particularly strong.”
The first iteration of the meme stock ETF used elevated social media activity and high short interest to screen for its components. This time around, Roundhill is aiming to take a more forward-looking approach to selecting companies that have a high potential for big swings.
After screening out the US-listed stocks and ADRs that are not among the top 200 most highly traded securities, Roundhill will then use the options market to zero in on 30 securities from the remaining list that have the highest implied volatility.
From those 30, through a mix of quantitative and qualitative research, the fund managers will select 13 to 25 stocks that will be held in the ETF. Mazza spotlighted Reddit and X as two of the social media platforms that will be key sources for Roundhill to get a handle on retail sentiment.
The Takeaway
It’s just yet another sign of how much people want what retail’s having.
To Mazza, the approach is about trying to be more adaptive to changing themes and a little closer to the ground floor in identifying and piggybacking names where retail traders see immense upside potential. The prior iteration rebalanced once every two weeks, while this time the meme stock ETF will trade “at least once a week, if not more frequently,” he said.