Single-Stock ETFs Target Meme Stocks

A recent REX Shares filing indicates the firm will join in the single-stock ETF trend sweeping the industry by homing in on the popularity of so-called meme stocks. The document outlines plans for 10 funds that will offer inverse exposure to stocks like Robinhood Markets Inc. and GameStop Corp. that have generated significant buzz on social media.  

Seven out of the 10 securities mentioned in the filing are holdings in the Roundhill Meme ETF (MEME), which launched late last year.  

The proposed ETFs are as follows: 

• REX Short MSTR ETF (MicroStrategy Inc.) 
• REX Short COIN ETF (Coinbase Global Inc.) 
• REX Short GME ETF (GameStop Corp.) 
• REX Short AMC ETF (AMC Entertainment Holdings Inc.) 
• REX Short PTON ETF (Peloton Interactive Inc.) 
• REX Short TLRY ETF (Tilray Brands Inc.) 
• REX Short NKLA ETF (Nikola Corp.) 
• REX Short HOOD ETF (Robinhood Markets Inc.) 
• REX Short BYND ETF (Beyond Meat Inc.) 
• REX Short PENN ETF (PENN Entertainment Inc.) 

Meme stocks are generally the securities of companies that have been targeted by online communities like those found on Reddit or Twitter to the extent that their share prices have been materially affected by the associated chatter.  

GameStop, the original meme stock, for example, saw its price briefly skyrocket by more than 1,800% in early 2021 after investors, mainly on Reddit, saw that the stock had been heavily shorted by institutional investors and pumped money into GME, creating a short squeeze. 

It was a temporary phenomenon, but GME has seen its share price continue to remain elevated from what it had been at prior all the Reddit attention.  

The REX Shares filing reflects a broad trend in the ETF space toward funds centered around single securities. A raft of leveraged and inverse ETFs targeting individual stocks have already launched from AXS Investments, GraniteShares and Direxion.  

Similarly, Innovator has rolled out one single-stock fund that looks to be a trial balloon for future products; it offers exposure to Tesla stock with a capped upside and a downside buffer. Another recent filing outlined plans to apply an option income strategy to individual securities, including single stocks and ETFs.  

Contact Heather Bell at [email protected]