The Rundown - Deep Dive: Could ChatGPT Cause the Next Meme Stock Rally?

Episode Date: July 27, 2025

The meme stock craze kicked back into full throttle again, but this time, the rally might have been driven by AI. In this episode we dive into how AI models could have been the key influence to a new era of meme stocks, including OpenDoor and Krispy Kreme. This next wave of ‘funny money’ might go beyond just meme stocks, with major banks warning that investors are overcrowding markets with risky investments. This video is for informational purposes only and reflects the views of the host and guest, not Public Holdings or its subsidiaries. Mentions of assets are not recommendations. Investing involves risk, including loss. Past performance does not guarantee future results. For full disclosures, visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Public.com/disclosures⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.

Welcome back to the rundown for another weekend deep dive. Today, we are talking about meme stocks. Memstock mania was back in full force this past week, giving shades of 2021. This time, the names were different. Open Door, Coles, GoPro, and Krispy Cream jumped into the mix. All of these stocks made big moves this week for no fundamental reason. So in today's episode, we'll look at what triggered the recent meme stock rallying, how this one compares to 2021, what role chat cheapy,

might have played in sparking this rally and what Goldman Sachs is quietly telling their clients about what comes next. We got a great show for you today. Let's dive in. This past week, we got a flashback to 2021 where a handful of stocks that were down bad suddenly shot up for no reason and kicked off a brief meme stock rally. It all started with Open Door. The struggling real estate tech company saw a stock price rocket over 300% in just six trades. sessions and at one point it was trading near $5 a share after spending most of the year in the $1 to $2 range. And once Open Door started flying, other names followed KrispyCream. GoPro and Coles were just some of the names that jumped a 20% in a single day without any major

announcements or earnings about the business. In fact, if you look into these businesses, they're all struggling. Open Door runs an online platform to buy and sell homes, kind of like CarMax but for houses. The company has been hemorrhaging cash for years now. Revenues were down 24% last year, and the stock has dropped over 90% since its highs from 2021. Similar story with Krispy Kreme. They might make some great donuts, but their stock price hasn't been so great. It's down more than 75% from its highs, and their most recent quarter saw revenues drop by 15%. And just to make matters worse, the company ended their partnership with McDonald's last month. Then you have GoPro. This company used to be one of the coolest things ever when their action cameras first

came out over a decade ago. But these days, there's a lot of competition in the action camera space, and the stock has lost nearly 98% of its value since its peak. And finally, you have Coles, your classic struggling department store that I shamelessly shop a lot at. Revenue there is declining. They're posting negative profits, and the company just ousted their CEO because of a scandal. I say all that because none of these companies are in great financial positions or have a bright future. But all of them do have one thing in common. They're heavily shorted stocks. short interest is around 20% and Coles is nearly 50%. So Wall Street is betting against these companies and retail investors on Reddit were trying to run the same playbook from 2021 by collectively

buying up these shorted stocks to generate a short squeeze to push the prices even higher. We saw this work with GameStop and AMC back in 2021 and it worked this time too, but only briefly. See, unlike the 2021 rally, this meme stock rally doesn't have the same legs or energy. In fact, many of the names that I just mentioned are already down more than 20% from their highs this week. And the reason for that is that meme stocks today are just different than 2021. In fact, AI is starting to play a role in these pumps too. So let's talk about it. It feels like every time meme stocks pop up, everyone is quick to compare it to 2021. But I'll be honest with you guys, I don't think that anything will ever be like 2021. Because you have to remember, back in 2021,

it was more than just a short squeeze of GameStop and AMC. The whole thing felt like a movement. It was retail investors sticking it to Wall Street in hedge funds. On top of that, you had a charismatic leader in Roaring Kitty. And plus, everyone was kind of bored from the pandemic and flushed with cash from the stimulus checks. This time, meme stocks have no leaders, there's no mission, there's no diamond hand solidarity. It's just traders trying to catch a quick pump. And now there's a totally new wrinkle, which is that AI might have played a role in pumping these meme stocks. Let's go back to Open Door. This stock got on everyone's radar after a hedge fund manager Eric Jackson tweeted about the company back on July 14th,

saying that his firm had taken a position in an open door because of the firm's AI model recommending it to him. That story got picked up on Wall Street bets and the stock notched six consecutive sessions of double-digit percentage gains following his endorsement. So it's kind of funny how a hedge fund manager sparked this rally and profited from it. So totally different from 2021. But here's where things get weirder. If you had asked ChatGPT last week on what the next meme stock might be, a lot of people were getting Open Door. Multiple retail investors told Bloomberg they got the recommendation to buy Open Door stock when asking Chat ChpT what the next meme stock might be. In fact, Bloomberg's Matt Levine wrote about this. He's a must read for anyone following the

markets. He ran his own experiment. And he found that when you asked Chat Chbett for stock ideas, it gives you a playbook that sounds like it was ripped straight from Wall Street bets. Chat Chbett tells you to look for stocks with tiny market caps and high short interest for a squeeze potential. And I guess this makes sense, right? Because chat GPT and other AI models were trained on data from the internet, including Reddit. So chat GPT has absorbed the collective consciousness of meme stock traders on Wall Street bets. And that has me asking so many questions. Like, what role could chat GPT or Gemini or Claude play in a future meme stock rally?

Like what happens when millions of people are getting their stock picks from the same AI chatbot trained on Reddit? And if you want to get real crazy with it, what if AI model? will start coordinating a meme stock pump themselves without humans. Like is it too far fetch for an AI to scan for short squeeze candidates, buy that stock, then generate content for social media hyping up that stock and recommend that stock to retail investors in the chat box to create the ultimate short squeeze. Again, I know all of this sounds kind of crazy and it might never happen, but I mean, the building blocks are there.

This week, we saw that AI can identify meme-worthy stocks, and we also know that AI can generate social media content because I feel like 80% of the content I see on Twitter is bots. The only missing piece here is connecting them all together into an autonomous meme stock machine. So as crazy as it sounds, the next meme stock rally might not start on Reddit, but actually on chat GPT. Now zooming out from this AI rabbit hole that I just went on, the fact that people are buying meme stocks again, that might be a warning sign of where the markets might be headed next. So let's talk about it. Mem stocks making a comeback this past week are just one of many reasons that some banks on Wall Street are starting to think that the market is getting a little too frothy.

Goldman Sachs quietly updated their clients on something called the speculative trading indicator. This is Goldman Sachs' way of measuring how much money is flowing into risky, unprofitable companies, and right now, that just hit levels not seen since the dot-com bubble and the 2021 pandemic frenzy. Goldman Sachs points to several warning signs, like call options, now making up 61% of all options trading. That's the highest since 2021 and a sign that people are very bullish right now. On top of that, you have IPOs that are popping on the first day of trading, and SPAC issuance hit $9 billion last quarter, which is the most since the first quarter of 2022. So those are all signs pointing to a frothy market, and Goldman Sachs is not the only one flashing

warning signs. JPMorgan is also saying the same thing. According to their research, investors are jumping into high volatile stocks like Palantir at the highest level on record going all the way back to. to the early 90s. That's the kind of behavior you see from investors when people stop caring about boring stuff like profit margins and just start chasing vibes. And historically, when markets reward pure risk taking over rational thinking, it usually doesn't end well. Remember, the 2021 meme frenzy was followed by a brutal sell-off in 2022. And the dot-com boom

was followed by a pretty horrific crash as well. So the fact that meme stocks are becoming popular again could be a canary in the coal mine signaling that investor sentiment might be reaching extreme levels. Now, that doesn't mean the good times will end anytime soon. In fact, according to Goldman's research, when speculative trading spikes like this, the market typically continues higher for three to 12 months. But then it does crash at some point

and returns over the next two years are consistently below average. So markets might keep partying for a while, but according to Goldman Sachs and JPMorgan, the signs of a potential hangover are popping up. So what's the takeaway here? Well, meme stocks are back, but the vibe is different. The rally this time is less sticky and fast-moving,

but the bigger story here is the return of wild speculation and the role of AI in the markets. We may have just witnessed the first AI coordinated market event, and it happened completely by accident. But it might happen again, because millions of people are now asking their AI chatbot for investment advice. So the old rule of just looking at fundamentals might not be enough anymore, now you have to ask yourself the question, what is chat cheap ETPT tells millions of people to buy a certain stock tomorrow?

And what if AI models start coordinating these pump and dumps on their own? So this all could mean that the markets are about to get a whole lot weirder. Well, all right, guys, that's it for today's weekend, deep dive. Hope you guys enjoyed today's episode. If you did and you have like eight extra seconds, consider giving us a five-star rating on Apple, Spotify, wherever you listen to your podcasts. And if you are listening and watching on Spotify or YouTube, let us know in the comments on what you thought about this one,

what you think the impacts of AI will be on the markets, and tell us what topics you want us to cover in future deep dive episodes. Thank you guys so much for listening and watching. Shout out to Mike and Connor for all the work behind the scenes, and we'll see you guys back here on Monday.