Super Micro Computers Inc. (NASDAQ: SMCI) has rallied close to 1000% in share price over the past year with its revenue reported to have more than doubled in its latest quarterly for the second quarter of the fiscal year 2024 which ended for them December 31, 2023. While the title of meme stock seems to be less frequently used to describe its success, the question of overvaluation is still appropriately examined by many investors. Especially after the 35% dip in SMCI stock over the last two days.

The three most notable meme stocks in tech that above-average notice volatility are Apple (AAPL), Meta (META), and Nvidia (NVDA). NVDA implied volatility (IV) ranks the highest of the three at 43.9, which is in the 51% percentile rank.

Some investors may compare the volatility of SMCI to, say, NVDA, however their respective gains are completely different. SMCI has jumped 1000% and NVDA has jumped 200% in the last year. The SMCI float is only at 47.5 Mn shares while the NVDA float is at 2.4 Bn shares, this 50:1 ratio of available NVDA to SMCI shares is also a reason for SMCI stock currently trading at nearly $200 more.

The selling frenzy in August 2023 saw SMCI investors divesting after a surging run causing a 23% drop in a day and also on February 20th-21st this year, when the stock saw a noticeable 35% dip. So, while the FOMO bubble seen in SMCI growth is sizable, it may not hold up. Not necessarily just because of overvaluation, but because of the nature of smaller floats.

With fewer available shares – a smaller float, or shares available to trade – traders have been left scrambling to find a buyer in time before the profits disappear, which forces the stock to plummet. Stocks with small floats generally tend to result in higher volatility, larger spreads, and lower volume.

The fact, however, remains that SMCI has an implied volatility of 111.5 which puts them in the 99% ranking and they only noticed a 37% year over year growth in revenue based on their year over year data at the end of their fiscal year ending in June of 2023.

NVDA, boasted massive returns in last years final quarter, a 265% growth year over year for their 2024 fiscal ending in January, and they are regarded unequivocally as a meme stock.

So, SMCI would, by virtue of logic, be characterized as a meme stock. The question is whether or not they can live up to the speculative hype over the course of 2024.