The popularity of the meme stocks is clearly backed by internet virality. So, these stocks’ dizzying rallies are usually short-lived given the stocks’ typically poor fundamentals. As investors focus now on turnaround industries that are benefiting from the global economic recovery, we believe highly overvalued healthcare meme stocks Clover Health Investments (CLOV) and Sorrento Therapeutics (NASDAQ:SRNE) are best avoided.Meme stocks typically generate investor interest through social media forums, and most of the time their rallies are not backed by strong financials or market technicalities. Given the speculative nature of retail investors and these stocks’ supernormal price gains, they generally retreat following an extended rally.
Meme stocks in the healthcare sector are currently more susceptible to a market crash because investors are focusing on outdoor and cyclical stocks amid the fast-paced economic recovery.
So, we think healthcare stocks Clover Health Investments, Corp. (CLOV) and Sorrento Therapeutics, Inc. (SRNE), which are currently surging on the meme stock craze, are best avoided now.