HX Weekly: July 21 - July 25, 2025

Hello reader, welcome to the latest issue of HX Weekly!

So, what's HX Weekly all about?

Each Friday, we bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

Thoughts on the Market

The Rise of Meme Stocks: From GameStop to GoPro

In early 2021, a quiet video game retailer, GameStop (GME), unexpectedly became the center of the financial universe.

Once hovering around $5, its stock suddenly soared to nearly $500, driven not by company news or earnings, but by the power of online communities.

This event marked the birth of the meme stock movement, where ordinary investors used social media to rally around struggling or heavily shorted companies, often turning them into overnight sensations.

The story of GameStop began with users on Reddit’s WallStreetBets forum who noticed hedge funds were betting heavily against the stock.

These investors believed that if enough people bought and held shares, they could trigger a "short squeeze" and force those hedge funds to buy shares at much higher prices to cover their positions. That would push the stock price up even more.

The plan worked!

Millions of everyday investors joined in, and GME’s epic rise became both a symbol of online financial activism and a viral internet event.

This wasn’t just about money—it was about community, rebellion, and the thrill of sticking it to Wall Street insiders.

And the movement didn’t stop at GameStop. Other companies like AMC Entertainment, Bed Bath & Beyond, and BlackBerry also saw their shares skyrocket as Reddit users, TikTok creators, and Twitter influencers championed them.

These meme stocks were often companies that had been left for dead by traditional investors, facing tough financials, shrinking sales, or outdated business models. What they all shared in common was just enough brand recognition or nostalgia to capture attention.

Social media plays a massive role in the meme stock phenomenon. Platforms like Reddit, TikTok, and Discord act as digital trading floors where investors exchange ideas, hype up picks, and post screenshots of their gains (or losses).

Unlike traditional finance, where Wall Street analysts issue research reports and hedge funds use complex models, meme stock investing is often driven by viral posts, trending hashtags, and collective sentiment. One viral video or tweet can ignite a wave of buying, regardless of what the company’s balance sheet says.

At the heart of meme stock mania is a mix of market mechanics and human psychology. Many of the stocks that go viral are heavily shorted, meaning investors are betting the stock will fall. This creates the perfect conditions for a short squeeze if buying pressure suddenly spikes.

At the same time, the excitement of chasing big gains, the fear of missing out (FOMO), and the shared mission of “sticking it to the man” all contribute to explosive price moves. These stocks often trade more like internet trends than traditional investments.

Meme stocks tend to thrive during speculative stages of the market cycle, when there’s lots of enthusiasm from retail investors. This usually occurs after a strong bull market run, when people are feeling confident and looking for fast gains.

They are less common during bear markets or recessions, when fear replaces excitement and investors become more cautious. Still, with enough online energy, meme stocks can sometimes defy broader trends.

More recently, new names have joined the meme stock club. Opendoor Technologies (OPEN), a digital home-buying platform, has seen massive price swings fueled by renewed interest from retail traders. Its ties to the housing market and its “disruptor” label make it appealing for the meme crowd.

Beyond Meat (BYND), once a Wall Street darling for its plant-based burgers, has returned to the spotlight as investors debate whether it’s a comeback story or a lost cause. That is perfect fodder for meme stock debates.

Krispy Kreme (DNUT), known for its glazed doughnuts, has also attracted meme attention this week. While not heavily shorted, the brand’s popularity and emotional pull give it meme potential.

Meanwhile, GoPro (GPRO) and Kohl’s (KSS) have found themselves back in the conversation.

GoPro’s iconic cameras and comeback potential appeal to retail traders, while Kohl’s, a department store chain with takeover rumors and activist investor interest, has become a battleground stock.

So, why are meme stocks still popular?

Because they combine money, community, and rebellion.

They make investing feel exciting and social. And in an age where everyone has a trading app and a smartphone, viral movements can move markets faster than ever before.

Meme stocks aren’t just a phase. They are a new part of the market landscape. But as exciting as they are, they're also risky. Prices can soar one day and crash the next, as evidenced by OPEN this week. For every success story, there are plenty of cautionary tales.

Still, the meme stock era has proven one thing. Retail investors are a force to be reckoned with! And when they come together online, they can reshape Wall Street’s playbook, one stock at a time.

Memes aren’t our cup of tea here at HX Research, but we enjoy watching the action.

HX Daily Redux

MEME Stocks are Here to Stay!

If you had any involvement in the stock market in the last week, we are sure you saw the (momentary) re-emergence of the "meme stock" phenomenon.

For those unfamiliar with it, back in the craziest part of the post-COVID BULL MARKET, several stocks saw gargantuan rallies.

What these stocks seemed to have in common was that they had very high short interest as a percentage of the available shares.

What exactly that means and why it is important will be the subject of an entire note tomorrow, but from a high level, many people were betting against these businesses.

Those bets made a lot of sense. The two most famous "meme stocks" were (and are) the video game retailer Gamestop Corporation (NYSE: GME) and movie theater operator AMC Entertainment Holdings, Inc. (NYSE: AMC).

Both businesses have many challenges.

Physical retailers face online competition, and video games can be downloaded and played online. While GME operates stores that focus as much on toys and collectibles as video games, it is not hard to understand why the business doesn't have a great outlook.

Movie theaters got hit hard during COVID-19 and are having difficulty recovering. Going to the theater is still a unique experience, but so much content is available online, and folks can build incredible home theater systems to watch it. The business isn't going away, but movie theater attendance has likely seen its peaks.

AMC also has a ton of debt (almost $5 billion), which puts additional pressure on the company.

This was true in 2021 when the stocks were near their lows. Despite the troubled outlook, though, look at what happened to the stocks back then.

In January 2021, GME went nuts and shot up from less than $5 per share to a peak of $86 by mid-February. This was on NO news…

It was a couple of months later for AMC, but in May of 2021, it went from less than $60 per share to a high of $387…

There are many reasons this happened, and we have written several notes about it in the past. Eventually, though, the poor fundamentals and the stock prices better reflected their economic reality. 

Below are the charts through mid-April. GME had fallen to just above $10 per share and AMC to below $3 per share…

Then, on Sunday, May 12 – the most famous "guru" of the "meme stock" phenomena named "Roaring Kitty" posted this on X/Twitter… 

It is the picture of a man (perhaps with a game controller in his hands) leaning forward as if he is getting more involved with whatever is in front of him. Something you would if you would get more engaged with a video game you are playing… 

Roaring Kitty hadn't posted in almost two years, so this was unusual.   What was much MORE unusual happened the following day on Monday, May 13. 

Below are the year-to-date charts of both stocks. Both stocks went wild! 

GME went from its Friday, May 10 close of $17.46 to a high of almost $50 by Tuesday, May 14. AMC went from $2.91 to a high of $6.86 on that same Tuesday. 

All of this is from just a single social post. One that did not even make any reference to either stock. 

You can see this on the charts above, but by the end of the week, both stocks had given back much of their gains. 

With its considerable debt load, AMC took advantage of the strength to sell/exchange stock for debt and gain more flexibility. This new stock in the market pushed the shares lower. 

GME did something similar by announcing they would sell up to 45 million shares of stock. They also pre-announced disappointing results. Both pieces of news drove the stock lower. 

This is also fascinating stuff, but what we think is most interesting is that it is happening AGAIN. 

When it happened in 2021, most analysts looked at the situation and blamed the massive amounts of monetary liquidity the government had pumped into the system. 

To avoid a collapse during COVID, the government outright sent folks cash, and the Federal Reserve cut interest rates to 0%. They also injected much more money across the board. 

This was called "ZIRP" or "Zero Interest Rate Policy" and was the driver behind the craziness and the inflation that followed. 

Yet here we are, three years later, and we see the re-emergence of similar price moves. 

Now, we certainly are NOT in a ZIRP environment. Interest rates have increased precipitously, and – while there has been much fiscal stimulus – no objective observer could look at the markets and say they are being driven by excess liquidity. 

Maybe not much liquidity is coming out, but it also is not coming in… 

So, how did this happen again? 

We can answer in one word – the INTERNET! 

There have been two fundamental changes in the nature of trading in the stock market over the last twenty years. 

The first is transaction costs.   

They have effectively gone to almost zero for various reasons, and trades can be fired off in seconds or less! 

Four decades ago, you had to call a broker, put in an order, pay a $25 (or $50 commission), and then wait 20 minutes to find out the result. 

Now you can buy stock quicker than you can buy DoorDash – and cheaper! 

The other factor is our ability to communicate with each other. 

Again, forty years ago, there was no way for investors to communicate with each other. Some newspapers came out daily, and we were in the early days of business-focused TV. 

Starting in the 1990s, we began to see the rollout of internet chat boards that allowed investors – who otherwise did not know each other–to start communicating. 

Today? 

We have grown that ability to be a community one thousand-fold. Through social media, mobile phones, ubiquitous high-speed internet connectivity, and various other internet outlets – thousands (or even millions) of investors can quickly group together for a common cause. 

Believe it or not, this used to happen on the old in-person New York Stock Exchange, where you would see groups of investors gang up to impact a stock. 

Now we are seeing that magnified times a million! 

Is this a bad thing? Honestly, we don't have an opinion but it is REALITY. 

We think those who blamed low interest rates for the craziness of the 2021 BULL MARKET misunderstood the changes that were taking place. The 2021 "crazy" is here to stay! 

Market Wizard’s Wisdom

Ram Parameswaran: Part One

For this week’s “Market Wizard’s Wisdom” we’re revisiting a two-part interview series with Ram Parameswaran of Octahedron Capital.

Ram is truly one of the best growth investors we know. We thought you’d enjoy his investment philosophy.

While the two parts we’ll share below contain key insights from the interview and our thoughts, you can also watch the original video podcast on YouTube if you prefer.

We originally published these in April of 2024.

Last week, we put out the tenth episode of our HX Podcast, and it was by far our BEST!

We had the opportunity to speak with our old colleague Ram – whom we have known for over a decade.

I first met Ram when he joined me at my prior firm, Falcon Edge Capital (now Alpha Wave). He was fresh from the brokerage side of the business and knew next to nothing about investing at the time.

He impressed me with his humility, curiosity, hard work, and raw intelligence.

We have kept in touch over the last ten years, off and on. He moved to Silicon Valley, joined one of the most successful technology-focused hedge funds, and now runs his own fund.

What we had not done over that time was have a conversation about INVESTING.

We had that opportunity last week on our podcast, and I have to say that I was BLOWN AWAY!

He has distilled his raw talent into an outstanding investment philosophy. One of the most focused and intelligent that I have ever seen.

On the back of that conversation, we wanted to take the following issues of HX Daily and share some of his insights along with our commentary.

Note that we have done some "light" editing to the stream-of-consciousness conversation from the podcast. You can listen to the original here or watch it on YouTube below.

Here we go…

On investing in “ten-bagger” stocks…

Well, first – this idea of “ten-baggers,” while it sounds sexy, is littered with many zeros. People only "cherry-pick" their successes (and don't mention their losers.) 

First, I would say I don't invest that way at all. I look for three- to five-baggers. Can I, over a reasonable period, make three times my money? That is for my public investments.

Most of the ten- to one-hundred baggers we discuss are found in private markets, not publicly traded stocks. That’s not available for many people in the audience, so the question is, how do you make ten times in the public markets? It does happen all the time…

Enrique’s Take…

This is a GREAT insight. We often discuss how a single ten-bagger (or more) can change your investment portfolio results. It is crucial, though, to understand that in publicly traded stocks they are hard to find and may  be too risky for most investors.

Remember that most stocks with THIS kind of upside also have a considerable downside. Many of them can (and will) go to zero, and that may not be something you can tolerate in your portfolio.

His target investment goals…

I'd also like to double my money but in three years. That's approximately a 30% IRR. With this goal, for me, what's important is my hit rate, and you know I'm really, really focused on hit rate. Once you have a high hit rate that generates doubles periodically, you end up with Hall of Fame returns, generally over long periods.

Yes, Steve Cohen is a certified genius, and part of the high hit rate is that he covers so many stocks in many sectors. Having a 55% hit rate covering a wide variety of equity and debt products is truly genius.

We cover 50 to 60 stocks, and our hit rate is much higher than that because we cover three to four areas. It's closer to 80 to 90%. That's the first thing I focus on.

Enrique’s Take…

As I said on the podcast – wow! This makes SO much sense!

Instead of covering a broad swath of the market, he focuses on a narrow group of stocks with tremendous upside – e-commerce, internet, software, etc.

His statement is true – if you can do an 80% hit rate with stocks that can double, you are a Hall-of-Famer…

The “Fake-It-Until-You-Make-It” mentality in Silicon Valley…

What happened during the “ZIRP” era is that many CEOs were way above their heads regarding their marketing and scaling. This is my caution number one in most technology companies.

The problem is that technology companies, especially ones backed by venture capital, get a lot of media waves, and they get a lot of media attention because the reality is you've got to “fake it until you make it.”

This was done for the longest time, meaning that many CEOs become extraordinarily good salespeople. You've got to be careful in understanding who's real, who's salesy and really reading human emotion and human behavior.

Now, of course, by the time they get to the public markets during the “ZIRP” era, some of those traces remain, which is why we saw just a lot of SPACs that got blown up, and we see our fair share of what I call carnival barkers.

Enrique’s Take…

"ZIRP" refers to "Zero Interest-Rate Policy" and refers to the policy undertaken by government central banks worldwide for many years to hold interest rates near zero. This resulted in the availability of a lot of inexpensive capital for entrepreneurs.

This is an insight that I had never thought of, and Ram being surrounded by the environment of Silicon Valley gave him the ability to identify it.

The reality is that entrepreneurs must have a tremendous amount of self-belief in the face of incredibly difficult odds. That is inspiring – and can help get them funding – but it doesn’t necessarily scale well once you have a real-world company.

Identifying the ones who can grow is a critical difference. For Ram's strategy, understanding management is vital.

Ram Parameswaran: Part Two

A different definition of the “TAM” and the “growth mindset”…

I actually think TAM analysis is completely wrong when it comes to technology companies.

Let's take Uber as an example. When Uber was created ten years ago, most people looked at the TAM and passed.

People laughed Travis out of the room for the most part; they said, you're replacing taxis. The taxi TAM is this small; who cares? Well, it doesn't matter because if you talk about, hey, how do people commute in their lives? Is that a way to take a lot of their volumes and put it on the system?

The second important thing is the “growth mindset," the growth behavior of the management team.

And number three, and most important, are the unit economics. How do you make money on a per unit basis?

And those three things matter to me more than TAM. In 10 years of doing this, I've got TAM analysis almost entirely wrong—almost every time.

My history on TAM analysis is probably like 10%. It's just wrong. It's always surprised me to the upside because I'm not an imaginative person.

Enrique’s Take…

“TAM” refers to the “Total Addressable Market.” This is how investors look at the opportunity the company is addressing.

This was another unique perspective. Ram excels at identifying businesses and managements that employ what he calls the "growth mindset."

This means looking beyond the simple analysis of the market they are addressing and looking more at the PROBLEM they are solving.

In another part of our conversation, he used the excellent example of Amazon.com, Inc. (NASDAQ: AMZN). They started by selling books, but they were creating a solution for consumer convenience and all the infrastructure around addressing that area.

Ram does an excellent job of identifying what we would call “network” type businesses.

Some long-term ideas…

Yeah, generally speaking, it's not our style (finding ten-baggers).

The way I think about this is that you can pick something that, across an extended time horizon of 10 to 15 years, can have that kind of upside.

If you find a reasonable quality company you can do it. I can make some recommendations that I think have a high chance of going up ten times if you look at a long-term timeframe.

An example of a company where I have reasonably high confidence this could happen is DoorDash Inc (NASDAQ: DASH). That could be a five-plus bagger on a long-term horizon.

Another one is that there is a reasonably high chance is Uber Technologies Inc. (NASDAQ: UBER). It has the chance to be a five- to ten-bagger on a reasonably long time horizon.

Another reasonable chance is Coupang Inc (NASDAQ: CPNG) in Korea. It has a chance to be a five- to ten-bagger on a longer time horizon.

Finally, I have confidence that Nubank (Nu Holdings Ltd (NYSE: NU)) in Latin America has a chance to be something similar, but you've got to look really, really long and far.

Enrique’s Take…

Will let these ideas stand by themselves and do your own work, but Ram shared four ideas that fit with his methodology. If he mentions them, I am sure he knows them backward and forward, and they are high-confidence ideas.

His core methodology…

Company's stocks go up when companies beat numbers. We are looking for companies that beat numbers and beat numbers for the quarter, for the year, and for three years ahead, also, where we have a varying perception of earnings and revenues.

Enrique’s Take…

THIS might be one of the most powerful summaries of an investment strategy I have ever heard in my thirty years as a professional investor.

He summarizes the core of what makes stock go up in just two sentences!

As I joked on the podcast, this quote is so powerful that I will get it tattooed somewhere! For the rest of you, I recommend writing it on a Post-It note and putting it on your screen…

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].