Recently, there has been a notable interest among individual investors in Tupperware, the consumer products brand.
Towards the end of the week, specifically on Thursday, Tupperware revealed that it had successfully reached an agreement with its lenders to reorganize its debt obligations. As a result of this announcement, the company’s stock experienced a significant surge, closing Friday with an impressive gain of 35.5%. It’s worth noting that just about four months earlier, Tupperware had hinted at the possibility of facing bankruptcy.
While it’s a common occurrence for a company’s stock price to fluctuate following a major corporate development, it’s important to highlight that Tupperware had already been witnessing a positive momentum in the stock market prior to the disclosure of this significant news.
The share value of the renowned food container brand has undergone a remarkable surge over the recent fortnight. On August 3rd, the company concluded its trading day at $3.52 per share, reflecting an astonishing increase of almost 480% since its stock price touched a yearly low of $0.61 per share on July 20th.
So, what has propelled this notable upswing? Tupperware’s swift ascent is being propelled by individual investors who are actively purchasing the stock, instigating an elevation in its price, as reported by Barron’s.
Similar instances of elevated stock performance due to the involvement of individual investors have been observed with other widely recognized companies in the past. These companies, often referred to as “meme stocks,” encompass entities such as GameStop, AMC Entertainment, and Bed Bath & Beyond.
Exercise caution before fully embracing the buzz, advises Douglas Boneparth, a certified financial planner and the founder of Bone Fide Wealth. Boneparth.
The allure surrounding a particular stock in a given moment can sometimes entice individuals to invest in a company without conducting thorough research beforehand.
“People often find themselves drawn to chasing momentum or succumbing to the popularity of a trend, hoping they’re not missing out on an opportunity. Unfortunately, more often than not, they end up arriving late to the affair,” he cautions.
Investing in meme stocks carries inherent risks. These stocks frequently exhibit unpredictable and volatile shifts in value, largely influenced by online rumors and discussions on message boards.
Rather than succumbing to hype, Boneparth advises investors to focus on comprehending a company’s historical performance. Publicly traded companies regularly release quarterly earnings reports that offer essential insights, including revenue figures and profit or loss metrics.
However, Boneparth acknowledges that it’s acceptable to allocate a modest portion of one’s investment portfolio for recreational purposes. He suggests directing around 10% of your portfolio toward specific companies that have undergone thorough research and align with your strong beliefs. This approach allows for investment in such companies without derailing broader financial objectives.
“In a worst-case scenario, investors may experience financial losses, serving as a valuable lesson learned. In the best-case scenario, they could generate profits that can then be reinvested into a more diversified portfolio,” he concludes.