“We don’t see a problem with paying a premium for a company producing strong profits, but none of the meme stocks are producing strong profits,” Trainer said, adding that valuations of the most popular meme stocks, especially GameStop and AMC, “remain untethered from reality.” “Investing in meme stocks carries reckless and unnecessary risk, which puts an investor’s portfolio in danger of potentially devastating declines,” said David Trainer, CEO of New Constructs, an investment research firm, in a report. That is worrisome to experts, many of whom urge investors to put their money in big blue chips like Apple and Microsoft. Neither GameStop nor AMC are expected to be profitable this year, or even next. However, the speculative and volatile nature of this asset class underlines the critical need for a cautious approach when it comes to trading meme stocks.”Ĭhan said that about half of the customers the app surveyed in a recent report indicated that meme stocks were “the biggest bubble,” even more than cryptos and housing. “Investors are not done with meme stocks just yet. “Last year’s meme stock craze brought a surge of new, younger investors to the stock market,” said Keith Chan, president of Moomoo, a trading app. So what does the big pullback in meme stocks say about the broader market? And has sanity returned to investing, or will the meme stocks make a comeback? Some argue that was done to benefit hedge funds who were losing money by betting against these companies.

The plunge in Robinood, ironically enough, might be cause for celebration for other meme investors: the so-called “apes” on Reddit who attacked Robinhood last year for briefly restricting the buying of shares of GameStop and other meme stocks.

Robinhood is down more than 25% this year and is trading at an all-time low. Much of their success could be attributed to traders who were fans of the brands, maybe even more than the stock fundamentals.Īnd Robinhood, which went public last year briefly and became a meme stock itself following its initial public offering, has tumbled as well. These two stocks caught fire in early 2021 as so-called memes - companies with rabid followings among individual investors - took off. Shares of GameStop have plunged nearly 35% in January while AMC has plummeted more than 40%. GameStop and AMC are up sharply from a year ago, but they’re off to a brutal start in 2022. It’s shaped up to be, to put it extremely mildly, a wild ride for it and other meme stocks like movie theater chain AMC ever since. It’s been a little more than a year since the meme mania in GameStop began.

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