Francis Scialabba
· less than 3 min read
One year ago today, shares of a struggling video game retailer by the name of GameStop shot up 90%, and another 60% in extended trading. It marked the onset of “meme stock mania,” a period of a few weeks where individual investors piled into stocks that had been written off or heavily shorted by professional investors.
Some observers predicted that, with the rise of meme culture on social media, increased access to the stock market through no-fee platforms like Robinhood, and greater animosity toward the Wall Street “suits,” the world of investing would be forever changed.
Maybe not. January 26, 2022, finds legendary meme stocks like GameStop and AMC looking more like MJ on the Wizards.
Along with most other companies, GameStop and AMC shares have taken a beating in 2022, and both are down at least 35% year-to-date (though their share prices remain well above their pre-meme stock days).
And despite a few crypto-related stunts that attempted to leverage their godlike status among individual traders, both meme stock darlings have had to confront real-world problems. AMC, for instance, is reportedly looking to refinance its high-interest debt with box office levels well below pre-pandemic times.
Big picture: Enthusiasm over meme stocks more broadly appears to be dwindling.
A number of financial products were introduced last year to track meme-friendly stocks, such as the FOMO ETF. But the only thing that ETF is missing out on is…actual meme stocks. Its largest holding currently is energy giant Chevron, and 40% of the fund is in cash, Bloomberg reports. According to its own manager, the current strategy “puts me to sleep.”
Meanwhile, on the social media forum that started the craze—Reddit’s WallStreetBets—power users have moved on to other stock forums and some complain that constructive feedback has been replaced by “cheerleading,” per the WSJ. Last November, the average number of comments on the main WSB page hit ~27,000, down from 47,000 the previous November.
Bottom line: Perhaps retail traders will once again band together to resurrect a zombie company. But probably not while the market is flirting with a correction.—NF
+ Further reading: Matt Levine wonders whether the memes are over.
Neal Freyman / 12.10.2021
Mary Tobler / 01.25.2022
Max Knoblauch / 01.25.2022
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