Happy Friday! We'll be tuning into House of the Dragon this weekend, hoping HBO's new show can wipe our memory of the last season of Game of Thrones. Before then, however, we're exploring:
Silly season is back
Yesterday news came out that a college student, Jake Freeman, had made $110m trading shares in Bed Bath & Beyond. The ailing retailer first became a minor meme stock in early 2021 when traders on reddit forum r/wallstreetbets rallied against the titans of high finance.
Since we first wrote about the meme-stock phenomenon, a lot has changed. Gone are the stimulus checks and loose monetary policy, replaced with inflation and an economy on the brink of a recession. Without the chart above for reference, you might have guessed that GameStop — the original meme-stock — might have completely cratered in that environment, but GME shares have held onto most of their gains surprisingly well.
A theoretical $100 invested in GameStop at the start of 2021 would have turned into more than $1,800 at the stock's peak. Although the shares have drifted lower since then, they remain some 10-20x higher than where they were for most of 2020. AMC Theatres, another reddit fan favorite, has also held onto some of its gains, while shorter-lived meme investments like BlackBerry haven't held up quite so well.
Losing money is (not) optional
Although Jake Freeman just bought plain-old boring shares, the investment instrument of choice for many retail traders investing in meme stocks has been derivatives — with call options the most common. Unsurprisingly, a new study from MIT found that retail investors make a series of mistakes when buying options — paying too much in the first place and being slow to respond to predictable declines in volatility after a company reports new information. Taken together, these lead to losses of 10-to-14% on average for investors trading high volatility announcements.
So if you dipped your toe into trading meme-stocks and didn't make $110m don't worry — you're not alone. Also, never forget that most professional fund managers underperform their benchmarks too.
Airbnb responsible
When it comes to parties, Airbnb has a few reservations. The home-sharing site announced a temporary party ban back in 2020, codified the move permanently in June, and are now introducing what they are calling "anti-party technology" in the US and Canada.
The move comes in the wake of a solid 12 months for Airbnb, which has seen the number of stays and experiences booked on the site bounce back above pre-pandemic levels. Reservations hit the 100 million mark for the second consecutive quarter, equating to $17bn of gross booking value, which suggests the company can afford to be a little more selective with their admissions policies.
The party-preventing tech is a little less sophisticated/dystopian — depending on your perspective — than it sounds. The tools will reportedly just analyze users’ profiles and previous booking activity to assess the likelihood of "bad actors" turning up and throwing unauthorized parties.
A new way to stay
It's hard to deny the impact that Airbnb has had since being founded in 2008. Consumers got options beyond traditional hotels and hosts had a new way to monetize their otherwise-empty homes. However, the San Francisco based company hasn't been without its critics. Some have accused the platform of driving up housing costs in hotspot areas as well as hollowing out communities by shipping in short-stay visitors with little regard for neighbors. The new party measures might help get some of the locals back on side.
We have food at home
In the unlikely event that you're a teenager reading this and trying to convince your parents to eat out this weekend, we have some statistical backup for you to deploy. In the last 12 months grocery store prices have jumped 13.1% in the US, while the cost of eating away from home has *only* gone up 7.6% over the same period.
These figures are particularly interesting when set against the backdrop of a mega-trend from the last few decades. Expenditure data from the USDA shows that, as recently as 1997, some 53% of food expenditure in the US was on food eaten and prepared at home. But at some point in the mid-noughties that switched, and as of last year food at home accounted for just 45% of total spend, while the majority was splashed on dining out.
COVID closures briefly reversed this trend, but with the inflationary gap between eating in vs. out at its widest since the 1970s, people may be tempted to turn away from home-made meals in favor of letting someone else do the cheffing a little more often.
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• Over 4 million people start their day with our friends at Morning Brew — the free daily newsletter covering all things business from Wall Street to Silicon Valley. Check it out.
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