Between June 18 and September 18, 2024, trends show that meme stocks have surged in popularity once again, with increased trading activity among retail traders, according to Capital.com data.

Notably, Trump Media & Technology Group Corp (DJT), primarily owned by former US president Donald Trump, has seen significant interest. It closed at $16.50, up 2.04% on October 7, with pre-market trading rising to $16.88, according to Nasdaq.

Blue-Chip Stocks Surpass Meme Stocks

Despite the renewed interest in stocks like GameStop and AMC, blue-chip stocks such as Tesla, Apple, and Coinbase have yielded better returns for traders over the last three months, especially when paired with stop-loss protection.

The analysis, based on the trading activity of 33,500 global traders on Capital.com, reveals that while meme stocks remain in the spotlight, they have proven less profitable than established blue-chip companies.

Stop-Loss Usage Impacts Profits

GameStop (GME) ranked as the third most traded stock on the platform during the summer, following Tesla and Nvidia. AMC Entertainment Holdings Inc (AMC) also made it to the top 10 most traded stocks during this period.

However, the trading dynamics for these popular meme stocks indicate a cautionary tale. Less than half, 44% of all AMC trades were profitable, while GameStop saw a modest profit rate of 51% among Capital.com traders.

Furthermore, meme stocks exhibited the lowest adoption of stop-loss protection, with only 13% of AMC positions and 19% of GME positions utilizing this crucial risk management tool. Stop-loss orders are designed to limit losses or lock in profits by automatically closing trades when prices reach predetermined levels.

In contrast, traders who employed stop-loss orders and focused on blue-chip stocks experienced higher profitability. Tesla trades, for instance, boasted a 60% win rate, with 22% of those trades implementing stop-loss protection, making it the most profitable equity trade of the summer.