NEW YORK - Tupperware Brands Corp has been warning for months that it may go bust, but that is not keeping retail investors away from powering an eye-popping rally reminiscent of the pandemic-era meme stock craze.
Shares of the iconic food storage container company have soared 768 per cent over the past two weeks as investors pile into the stock, dinging short-sellers and sparking excitement across retail trader platforms.
The frenzy shows that the meme stock phenomenon, which fuelled rallies across heavily shorted companies such as GameStop in 2021 and led to the demise of hedge fund Melvin Capital, is not dead.
Retail traders have bought US$15 million (S$20 million) worth of Tupperware shares since July 21, when the company’s market value stood at US$40 million, data from Vanda Securities shows. Since then, it has increased almost sixfold, to US$239 million. Tupperware’s ticker was among those trending on retail trader chatroom Stocktwits, while mentions on Reddit’s WallStreetBets forum jumped alongside the surging stock price.
That is despite the company warning since April that it had substantial doubt as a going concern and had engaged financial advisers to explore options.
In March, it identified a material weakness in its internal controls that forced it to restate prior results.
On June 30, the company reached a waiver agreement with some of its creditors, but still forecast having insufficient liquidity to make its July interest payment.
Tupperware did not respond to requests for comment.
The company’s shares soared during the Covid-19 pandemic, as more people eating at home boosted sales of kitchenware. It did not last. The stock dropped 97 per cent in the 2½ years following a January 2021 peak.
The stock’s recent gains have cost short-sellers roughly US$37 million in paper losses over the past month, according to data from analytics firm S3 Partners, as the price to short shares surged by more than 10 times. Still, the stock’s surge is only increasing short interest.
Roughly 30 per cent of shares available for trading are currently sold short, the data shows, the highest level in more than a year and a spike from less than 10 per cent in November. The increasing amount of short interest paired with the rising cost to make such bets shows Wall Street is not convinced the move higher will last.
In the meantime, Tupperware shares rallied 26 per cent in New York on Tuesday to US$5.38, its best close since last November. BLOOMBERG
