“Easy come, easy go” seems to apply to “meme stocks.” Brutal 40%-plus losses in these stocks make the S&P 500’s record run look good.
Investors piling into 15 select hotly traded stocks discussed online, such as AMC Entertainment (AMC) and GameStop (GME), lost nearly half their remarkable score this year. These 15 stocks soared on chatter on Reddit. But they’ve dropped $25.6 billion in market value since AMC Entertainment peaked on June 2, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. June 2 is now seen as the day the meme furor peaked.
That drop in market value is astounding in that it erases nearly half these stocks’ $59.8 billion in gains this year until the June 2 peak. And that comes amid wipeouts in other popular plays. Grayscale Bitcoin Trust (GBTC), which tracks the price of the popular cryptocurrency is down 20% this year.
The “meme stock craze is entering a new phase, one with fewer new retail stock traders, which will make these names even more volatile,” said Nicholas Colas, co-founder of DataTrek Research. “Every craze needs new adherents (not just the same crowd) to keep it relevant, and … those are in increasingly short supply.”
AMC Is The Poster Child Of Meme Stocks Of Pain
Timing is everything, especially with meme stocks. Investors who piled into shares of the struggling movie chain are now struggling themselves.
Shares of AMC Entertainment tanked more than 42% from the June 2 high. That crash erased nearly $13 billion in gains, more than any of the other major meme stocks. That in itself is remarkable as $13 billion is more than what 62 entire companies in the S&P 500 are individually worth. It also strips away nearly half the $30.9 billion gain AMC Entertainment investors enjoyed from the start of the year until the high.
Don’t feel too bad for meme stock investors, though, as least the ones who got in early. AMC Entertainment’s stock is still $18 billion more valuable than it was coming into the year. Shares are still up nearly 1,600% this year. Had you plunked $10,000 down on the stock coming into the year, you’d still have $169,811 now. That’s a superior return to any stocks in the S&P 500, and even the broader S&P 1500. Should you buy AMC Entertainment stock now?
GameStop Started Fading Early
Shares has lost more than half their value from their late January high. Investors are now down $7.7 billion from the June 2 meme stock nadir. It’s the second-largest wealth implosions among the major meme stocks. And it wipes out more than 40% of the stock’s gain from the start of the year though June 2. Should you buy GameStop stock now?
But gain, getting in early (or out) is your salvation.
Even following multiple crashes this year, GameStop is still up more than 785% this year. That’s put $11.2 billion into investors’ pockets during that time. And it’s not just the famous meme stocks getting hit. Bed Bath & Beyond (BBBY) found itself get swept up in the buying activity. And now that stock is down 37.4% from the June 2 high. That move down erased $1.8 billion in market value — leaving it up just 56%, or $665 million, for the year.
Much of the manic interest in speculative stocks is gone now, returning to pre-pandemic levels, Colas says. Looks like now it’s time for the fundamentals to matter, even to meme stocks. And it appears, that’s not nearly as exciting.
Meme Stock Implosion
Most key Reddit stocks crater from AMC Entertainment’s June 2 high
|Investment||Symbol||YTD stock % Ch.||% ch. stock from June 2||Market value ch. from June 2 ($ millions)||Sector|
|AMC Entertainment||(AMC)||1,598.1%||-42.4%||-$12,906.5||Communication Services|
|Bed Bath & Beyond||(BBBY)||55.9%||-37.4%||-$1,795.0||Consumer Discretionary|
|iShares Silver Trust||(SLV)||-0.8%||-6.8%||-$1,653.5||Financials|
|National Beverage||(FIZZ)||4.1%||-16.3%||-$803.0||Consumer Staples|
|PetMed Express||(PETS)||-8.8%||-36.5%||-$338.0||Consumer Discretionary|
|Tanger Factory Outlet Centers||(SKT)||86.2%||-6.7%||-$134.1||Real Estate|
|AMC Networks||(AMCX)||55.3%||0.4%||$9.3||Communication Services|
|Ligand Pharmaceuticals||(LGND)||16.5%||2.2%||$41.1||Health Care|
|Workhorse Group||(WKHS)||-41.0%||1.4%||$19.7||Consumer Discretionary|
|Tootsie Roll Industries||(TR)||17.7%||0.9%||$66.1||Consumer Staples|
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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