Ah, the meme stocks! Those whimsical wonders of Wall Street are sounding alarm bells again this year. But let’s be honest: this year’s wild ride is more like a leisurely stroll in the park compared to the retail trading frenzy of yesteryear. It seems the stock market has decided to don a sensible cardigan and approach these stocks with what can only be described as ‘greater caution’—the type of caution you’d expect from a squirrel crossing a busy street.
According to Vanda Research, the inflow into meme stocks resembles a trickle rather than a deluge compared to 2021. Speculation seems to have taken a back seat, perhaps rear-ended by reality. Many of these meme companies are floundering like fish out of water, dragging investors down with them. Those considering a nostalgic leap into meme stock waters might want to remember that nostalgia is often more of a money pit than a golden opportunity.
Fasten your seatbelts, folks! Here are three meme stocks you might want to give a passing wave to—as they’re best left on the side of the road. They possess all the potential of a wet towel and their underlying businesses are about as promising as a rainy day picnic. It’s time to steer clear of these automotive wrecks!
Let’s roll the spotlight over to AMC Entertainment (NYSE:AMC), which has experienced a fortune reversal so dramatic it could inspire a soap opera. With stock trading at a mere $5 per share, it’s akin to watching someone drop a million-dollar painting into a kiddie pool. The culprit? An aggressive strategy of issuing new stock, increasing share count from 23.6 million pre-pandemic to a staggering 295 million today. Bravo!
Debt is AMC’s heavy anchor, dragging it down to the depths with a long-term debt haunting its balance sheet—over $4.5 billion, plus operating lease obligations that are lurking on the horizon like a horror movie villain. As foot traffic continues to evaporate, thanks to streaming services that seem to have become everyone’s new best friend, AMC’s quest to reclaim its box office glory feels more like a scripted tragedy.
Next up, we have BlackBerry (NYSE:BB), the once-revered smartphone pioneer that seems to have gotten lost on its way to becoming a cybersecurity savior—like a knight without a sword. The company reported a net loss of $42 million last quarter, a delightful 280% increase in negativity compared to the $11 million loss of yesteryear. Their revenue fell 61%—because who doesn’t enjoy a little creative destruction?
Meanwhile, as if things weren’t bleak enough, BlackBerry is laying off workers and shutting down offices like a wilderness explorer out of tissue paper. With a declining IoT business and a financial performance that reads like a very bad horror novel, we’re left asking whether the business model has any juice left—or if it’s just a mirage.
And then we have MicroStrategy (NASDAQ:MSTR), a company more in love with Bitcoin than most people are with their pets. Despite a 239% gain last year from acquiring Bitcoin like it’s Pokémon cards, the volatility of this crypto market makes it more of a rollercoaster ride than a stable investment. Just last month, MSTR stock took a nosedive of over 24%. Oops! So much for those golden gains!
In conclusion, as we navigate through these murky waters of meme stocks, keep in mind the heartwarming story of caution and potential financial disaster. Just because something tickled your fancy a year ago doesn’t mean it will perform any better now—take those memories and invest them wisely elsewhere. After all, who wants to watch their money do a dramatic dive off a cliff?
On the date of publication, Muslim Farooque did not have any positions in the securities mentioned in this article, and nor did the responsible editor. Because we can’t all be thrill-seekers, after all!
Muslim Farooque is an investor with a knack for analysis, a passion for all things tech, and dreams of turning financial wisdom into comedy gold.
