The Tupperwar(e) Beef: A Culinary Clash of Retail Investors vs. Hedge Funds

Introduction

In the ever-evolving world of meme stocks, where social media buzz and speculation drive market trends, a new entrant has stirred the pot. Tupperware, the iconic homeware brand, has cooked up a storm in the stock market, rallying 350% in just five trading days. But what’s behind this sizzling surge? Let’s unseal the container and find out!

A Short Definition of Meme Stocks

Meme stocks are a phenomenon where financially troubled companies gain virality online, leading to soaring and crashing in price and high trading volume. This rise and fall have little to do with the stock’s fundamental value and more to do with speculation, entertainment, and social media influence. Examples include cinema chain AMC and the bankrupt home goods store Bed, Bath & Beyond.

Tupperware Meme Stock Rally

Investors have turned bullish on Tupperware for no apparent reason, despite signs of trouble at the Florida-based company, including declining sales. The stock’s rally seems to have been stoked by market interest in other meme stocks, such as AMC.

Here’s a brief timeline of Tupperware’s rise:

• July 18, 2023: Tupperware’s stock price was 62 cents.
• July 28, 2023: Tupperware’s stock price stood at \$3.39, a 446% increase from less than two weeks ago.
• October 2022: Tupperware starts selling in Target stores.
• April 2023: The company announces “substantial doubt” about its ability to stay afloat, and the NYSE warns it against breaching compliance.
• May 2023: Tupperware signs on investment bank Moelis & Co to explore strategic alternatives.
• July 2023: Blackrock steps in as an investment partner to Tupperware.
• Shorted Shares: 9.69 million shares of Tupperware are shorted, representing 27% of all shares of the company. Key short-selling investors include Susquehanna International Group LLP, Two Sigma Securities LLC, Group One Trading L.P., PEAK6 Investments LLC, and Cutler Group LLC CA.

The Short Squeeze Phenomenon

A short squeeze occurs when a stock’s price rises sharply, forcing those who bet against the stock (short sellers) to buy it to prevent even greater losses. Their scramble to buy only adds to the upward pressure on the stock’s price. Short squeezes have occurred in the past with stocks like GameStop and AMC, where retail investors coordinated to drive up the price, causing massive losses for hedge funds that had shorted the stocks.

In the case of Tupperware, the rapid increase in stock price and the high percentage of shorted shares created a similar short squeeze scenario. The retail investors’ push against the short positions of major hedge funds led to a sudden and significant price increase, further fueled by social media discussions and speculation.

Conclusion

The Tupperware meme stock rally is a testament to the unpredictable nature of meme stocks, where brand recognition and social media chatter can turn a household name into a hot stock overnight. The battle between retail investors and big “bad” hedge funds adds a layer of complexity, with retail investors aiming to suck money out of the hedge funds that have shorted the stock. While the rally may bring temporary gains, it’s essential to remember that meme stocks are often based on hope rather than certainty. Investors must approach with caution, as the lid can quickly snap shut on such speculative ventures.