Tupperware (NYSE: TUP) stock is up 43% again after a day or two of declines. So, on their summer 2023 bingo card, who had TUP as their next meme stock? For that is what is happening here. We a company in dire straits, one that looks like heading for Chapter 11 at best. Yet we're also seeing considerable retail investor interest in being on the bull side. There's a short term case that it will work too. Push the price up enough and the 15% or so of the issue that is short will have to cover, driving the price up again. The problem here is that unless something truly extraordinary happens this is only a short term impetus. The base business problems won't fade away even if the shorts get squeezed. And it's not obvious that the base Tupperware business would actually benefit from more capital even if such a squeeze led to a stock issue being possible.
As we've said before about Tupperware: “They need to file a 10K for 2022. Yes, very lawyer and accountant so they've filed an 8K to explain why the 10K is late. Which is rather worse than had been expected. It was already known why the annual report was late - they've found out that the accounts are a mess. Retained earnings (ie, the capital of the company) was over stated by perhaps $28 million before 2020. This is really pretty late to be finding that out. That they just can't file the form shows that they've got problems sorting this out. Further, in the 8K, the form they did file, there's a “going concern” warning. Now, sure, they've got 6 months to get that 10K sorted out. But it looks like sorting the accounts out to enable that is showing up other, how to put this delicately, mild little problems with accounting policies and tracking.” As we also indicated, the management that allowed these problems to develop might not be the best people to solve them.
Tupperware stock price from NASDAQ
Which is where we get to that retail investor interest. As we've also said about TUP stock: “But it's also possible that Tupperware is the new meme stock. Household name, small cap fallen on bad times. Maybe the r/wallstreetbets crowd has decided to climb aboard? These explanations are not exclusive - the GameStop game all started as a short squeeze after all.
If this is just a short squeeze then we can expect the effect to fade soon enough. If it's some new found meme stock status - or even, the cause of it - then who knows where it will end. For at that point prices become entirely divorced from any objective reality. Just depends on how many people decide to come out and play.”
The difficulty with this is that how far a meme stock goes depends upon that retail interest. The actions of the crowd that is. So, what are they thinking and how long are they going to think that? That's what the speculation is and good luck with it.
