Revenue growth, profit margins and historical valuations have traditionally formed the basis for assessing a company’s value. Analysts incorporate these business fundamentals into valuation models, alongside factors such as cash flows, competitive strength and the quality of management. The underlying assumption is that a company’s share price will, over time, converge towards its intrinsic value. Based on this, investors can assess whether a stock offers upside potential – or not.
"}},{"componentType":"sectionTitle","title":"The Compelling Story of SpaceX"},{"alignedImage":{"position":"bottom"},"componentType":"paragraph","richBody":{"value":"Traditional valuation methods, however, appear to be losing some of their influence. In the recent SpaceX IPO, around 30% of the shares were explicitly reserved for retail investors. This is significantly higher than is customary in a public offering and highlights the growing influence of retail investors on share price formation in the period following an IPO. This group is driven not only by valuation metrics, but also by sentiment, expectations and, above all, the story behind a company.
SpaceX is a prime example. The company combines extraordinary growth prospects with a compelling narrative centred on technological innovation and space exploration. Analysts point out that such “story stocks” tend to be more sensitive to share price movements that are disconnected from underlying financial performance. This became immediately apparent during the first few days of trading, when the share price was driven largely by momentum and broad retail investor enthusiasm.
"}},{"componentType":"sectionTitle","title":"The Return of Meme Stocks"},{"alignedImage":{"position":"bottom"},"componentType":"paragraph","richBody":{"value":"This trend is not occurring in isolation. The resurgence of so-called meme stocks also illustrates how market movements are increasingly influenced by collective investor behaviour. While GameStop and AMC dominated headlines a few years ago, stocks such as Opendoor, Kohl’s, Krispy Kreme and GoPro experienced sharp gains in 2025 despite the absence of any clear fundamental catalyst. These rallies were fuelled by attention on platforms such as Reddit, where speculation and herd behaviour created a self-reinforcing dynamic.
A key element of this phenomenon is the so-called short squeeze. Many popular meme stocks are mature or struggling businesses in which professional investors have little confidence and therefore hold short positions. When retail investors begin buying shares en masse, short sellers can be forced to close their positions. This creates additional demand for the stock and pushes share prices even higher. In such cases, rising prices are driven not by improving business performance but by market mechanics and investor behaviour.
"}},{"componentType":"sectionTitle","title":"Fundamentals Temporarily Take a Back Seat"},{"alignedImage":{"position":"bottom"},"componentType":"paragraph","richBody":{"value":"This does not mean that fundamentals have lost their relevance. Profitability, competitive positioning and cash flow generation ultimately remain the key determinants of a company’s value. What does seem to be changing, however, is the timing of their influence.
In the short term, sentiment, liquidity and market positioning are playing an increasingly prominent role. Over the longer term, however, the gravitational pull of fundamentals tends to draw an overheated stock back towards a more rational valuation.
Psychological factors are also important. Investors do not always buy a stock because it is attractively valued; sometimes they buy simply because they expect someone else to be willing to pay a higher price later. This is closely linked to the so-called “greater fool theory” — the belief that there will always be another buyer prepared to pay more. As long as that mechanism remains intact, share prices can continue to rise. Eventually, however, the underlying value of a business can only be ignored for so long.
"}},{"componentType":"sectionTitle","title":"Ultimately, Fundamentals Matter Most"},{"alignedImage":{"position":"bottom"},"componentType":"paragraph","richBody":{"value":"Today’s market pricing is increasingly a combination of numbers and psychology. In a world where stories spread instantaneously through social media and online investment platforms, sentiment and herd behaviour can temporarily outweigh underlying business fundamentals.
Investors should therefore be careful not to be swept away by compelling narratives. If something appears too good to be true, it often is. Ultimately, investor attention tends to return to earth — and back to the fundamentals.
"}},{"componentType":"linkList","iconTitle":{"title":"Read more"},"textLinks":[{"text":"Number of the Week overview","url":"/en/personal/investing/market-news-and-views/number-of-the-week-overview"},{"text":"More news & views","url":"/en/personal/investing/market-news-and-views"}]},{"componentType":"sectionTitle","title":"Good to know"},{"componentType":"paragraph","richBody":{"value":"Investing involves risks and costs. The value of your investment may fluctuate. Past performance is no guarantee of future results. Read more about the risks of investing.
This publication has been prepared on behalf of ING Bank N.V. and is intended for information purposes only. ING Bank N.V. obtains its information from sources deemed reliable and has taken the utmost care to ensure that the information on which it based its views in this publication was not incorrect or misleading at the time of publication. ING Bank N.V. does not guarantee that the information it uses is accurate or complete. The information contained in this publication may be changed without any form of announcement. Copyright and data file protection rights apply to this publication. Data from this publication may be reproduced provided that the source is stated. ING Bank N.V. has its registered office in Amsterdam, commercial register no. 33031431, and is regulated by the Dutch central bank De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM). ING Bank N.V. is part of ING Groep N.V.
"}}]},"hasMacro":false,"id":"d891dad2-d8ec-4df4-a536-cde4eabafbf7","localeString":"en-GB","mainHeaderZone":{"backLink":{"textLink":{"text":"Market news and views","url":"/en/personal/investing/market-news-and-views"}},"componentType":"productHeader","coreHeader":{"body":"1 July 2026 – Fundamentals remain the foundation of investing, but they no longer tell the whole story. The IPO of SpaceX demonstrates that a compelling narrative can be just as important.","headerImage":{"altTextNL":"Getal van de week 30 procent","extension":"png","original":"https://assets.ing.com/asset/d353c3a0-20fd-494e-9d98-6a3b9be79068/Number-of-the-week-1-juli-2026-804x240.png","transformBaseUrl":"https://assets.ing.com/transform/d353c3a0-20fd-494e-9d98-6a3b9be79068/Number-of-the-week-1-juli-2026-804x240","type":"image","width":804},"subtitle":"Number of the Week","title":"The power of a compelling story"}},"publishDate":"2026-06-30T16:14:18.241+02:00"}}