Are meme stocks dead? AMC, Gamestop and others
In recent years, meme stocks have garnered significant attention in the financial world. A specific group of independent investors has made these stocks quite popular due to viral memes or buzz on social media platforms.
This popularity has driven up the prices of these stocks, making them subject to speculation and hype.
Are meme stocks dead?
The phrase “meme stocks” describes how certain stocks are frequently discussed and shared on social media in a manner akin to a meme. Instead of being based on a thorough knowledge of the financial fundamentals of the underlying companies, the notion behind these investments is frequently based on common enthusiasm and hype.
In 2021, the sudden surge of meme stocks caused a major upheaval in the finance industry.
These stocks, such as GameStop (GME), AMC Entertainment Holdings (AMC), BlackBerry (BB), and Bed Bath & Beyond (BBBY), gained prominence among individual investors who used Reddit’s WallStreetBets forum and other social media sites like discord.
This group of investors, commonly referred to as “retail traders,” joined forces to manipulate stock prices and challenge the conventional financial system, all while trying to make a profit.
However, the question remains: are meme stocks dead?
My friend is a divorce lawyer. She said business has never been this good. She is on track to pull $2 million this year alone. The big thing driving divorces are husbands who lost everything in crypto and meme stocks. Ladies are upset and walking out of a marriage.
— Recession Confessions (@TrackInflation) February 7, 2023
A funny tweet aside, the answer is not as simple as a yes or no. While the hype surrounding these stocks has certainly cooled down, they are not entirely dead.
Some of the stocks have maintained their high prices, while others have fallen back down to earth. It’s certainly a case-by-case scenario, which I’ll share my stock predictions on for each.
Let’s take a closer look at the four stocks mentioned above.
Gamestop stock prediction ($GME)
Starting with GameStop, the stock that sparked the meme stock trend has gone through a tumultuous journey since its rapid rise in late 2021. Despite rocketing about 350%
the stock dropped and stabilized around $50-$60 per share.
Although the stock has made a partial recovery in recent times, it still remains far below its highest point. The company has been facing difficulties in making a profit in recent years, leading to uncertainty about its future prospects/
The price movement of GameStop’s stock has been a topic of much discussion and analysis since the stock’s surge in late January 2021.
According to Yahoo Finance data, the stock price of GameStop was trading at approximately $47.7 in August 2022, after having declined from its all-time high reached earlier in the year.
Over the next several months, the stock price continued its period of a relatively downward trend, with occasional fluctuations, until February 2023 when it was trading at around $24.8.
This represents a notable decrease from pre-2022 levels and is still significantly lower than the stock’s all-time high.
A gamestop stock prediction might show strength in the medium term. However, I would argue that with Gamestop investing heavily into their NFT marketplace and Web3 gaming, much of their stock outlook is predicated on the success of crypto.
If you’ve been reading Blue Chip Buzz, you’ll know my personal stance on the future of crypto.
Spoiler alert, I’m a crypto bull and believe that Gamestop stock will be a beneficiary of it, despite what current technical analysis shows.
AMC stock prediction ($AMC)
On the other hand, AMC Entertainment Holdings has been a bit of a different tale.
The all-time high AMC Entertainment Holdings stock closing price was 62.49 on June 02, 2021. The stock has been largely constant since peaking at around $62 per share in late January 2021.
The share price has varied between $5 and $12, with occasional jumps higher. The company’s sound financial position and capacity to maintain profitability in the face of the COVID-19 pandemic should be credited for this stability.
Recently, AMC announced new pricing for their theatre chains. More desirable seats will now cost movie-goers more money.
Despite causing some initial backlash from loyal AMC patrons, this shift could benefit the company long term.
How so? Think what Netflix ($NFLX) is doing by cracking down on password sharing. By AMC charging more for better seats, they’ll drive higher revenues.
It’s also similar to how the airlines have calculated the returns on each seat in their aircraft. Though, air travel leads a lot to be desired, consumers understand they get what they pay for.
A sensible AMC stock prediction would suggest that the company has enough market share to continue growing revenues.
For what it’s worth, AMC’s CEO, Adam Aron, claims to be on the side of retail investors.
It continues to astound and confound me that some out there hypothesize that I am not on the side of retail investors. I will say it over and over. I own or have an economic interest in millions of AMC shares and APE units. I am a retail shareholder. Of course I am on your side!
— Adam Aron (@CEOAdam) February 10, 2023
The technical analysis for AMC stock leaves a lot to be desired. But the reason retail investor’s pick stocks is certainly not always for strong technical indicators.
While looking less appealing in the short term, we could see AMC’s stock price go through several pops in the future, especially during the next bull run, whenever that will be.
Blackberry stock prediction ($BB)
BlackBerry, formerly known as Research in Motion, has gone through a similar trajectory to GameStop.
At the end of January 2021, the stock reached a peak of close to $27 per share, however, it has since dropped to roughly $9 per share.
The company has been in the process of shifting its focus from a smartphone maker to a software company, and the outcome of this change is yet to be determined in the long run.
For the investors that don’t focus on fundamentals, Blackberry’s software is in the cyber security space.
Wall street consensus on cybersecurity stocks seems quite bullish.
However, given that I still associate the phrase ‘ping me’ with Blackberry, I am not bullish on this stock like I am long term with Gamestop and AMC.
Bed bath and Beyond stock prediction ($BBBY)
Since peaking in late January 2021, the share price of Bed Bath & Beyond has fallen more gradually. The stock has dropped back down to roughly $20 per share after reaching a high of almost $34 per share.
It’s unclear whether the company will be able to turn things around in the future as it has struggled with dwindling revenues in previous years.
Although I do shop at my local bed bath and beyond occasionally for household items, I don’t feel an affinity for this industry like I do for gaming ($GME) and the movies ($AMC).
Though my affinity for companies and industries does not mean I profit off of them or that their stocks are good or bad.
There was a curious case of a retail trader having success bed bath and beyond stock, making roughly $110 million off a pump in August of 2022.
Admittedly, the above scenario is most stock traders dream, leveraging that much money on a meme stock, doesn’t seem wise.
For my bed bath and beyond prediction, I am unequivocally bearish each short and long term.
Is the meme stock party over?
Although the excitement surrounding meme stocks has declined, they are not entirely gone.
Some of these stocks have held onto their elevated prices, while others have returned to more reasonable levels. Before making any investment, it is crucial for investors to carefully evaluate a stock and gather information, especially considering the volatility and unpredictability of meme stocks.
It should also be kept in mind that investing in the stock market is a long-term strategy, and short-term profits should not be the main objective.
Unless of course you consider yourself a ‘Big D Trader.’
The rise of meme stocks has sparked discussions about the authority and impact of individual investors in the stock market.
Although the retail traders on WallStreetBets and other social media forums can exert a substantial influence on certain stock prices, the long-term stability of these stocks is still uncertain.
Many of these meme stocks, including GME, BB, and BBBY, were struggling businesses with doubtful financials and unsteady futures. The sudden increase in stock prices was largely driven by speculative excitement rather than any tangible enhancement in the company’s future prospects.
The issue at hand is if meme stocks pose a danger to the stock market’s already fragile stability.
Although the meme stock trend had a limited effect on the market overall, it sparked worries about retail traders’ ability to control stock prices and produce bubbles.
This could result in substantial harm to novice investors who become swept up in the excitement.
The surge in popularity of meme stocks has led to heightened attention on the actions of institutional investors such as hedge funds in the stock market. The use of their resources and power to influence stock prices and engage in speculative behavior has been a source of criticism for some time.
The meme stock trend has highlighted these issues, triggering discussions about the necessity for tighter regulations in the stock market.
In addition to the above points, the rise of meme stocks in 2021 was often described as a democratization of the financial market.
With the help of social media platforms such as Reddit, individual investors were able to collaborate and exchange information like never before. This resulted in a scenario where retail investors outperformed traditional hedge funds and other institutional players on Wall Street.
The popularity of stocks such as GameStop, AMC, and Bed Bath & Beyond skyrocketed, driven by the sense of unity and adventure among retail investors who took a chance on these stocks despite reservations from more seasoned investors.
The rise of meme stocks symbolized a shift in the investment landscape, as retail investors exercised their collective power and challenged the conventional norms of Wall Street.
Conclusion
Conclusively, the rise of meme stocks has prompted discussions on the influence of retail investors, the reliability of the stock market, and the responsibility of institutional investors and stock trading websites.
Although the buzz around meme stocks has faded, their effect on the financial arena is likely to persist. It’s yet to be determined if this will drive positive changes in the stock market or if it will simply be viewed as a temporary trend.
[…] I wouldn’t quite label the Nancy Pelosi themed portfolio as a meme stock, I’ll leave that to Gamestop, AMC and others. […]