Meme Stock Meltdowns: 3 Names to Sell Before They Crash
As the stock market evolves, the era of meme stocks seems to be a thing of the past.
Popular meme stocks such as AMC Entertainment (NYSE:AMC) and Ocugen (NASDAQ:OCGN) have tanked in value, shedding most of their gains during the retail trading frenzy.
Moreover, the Federal Reserve’s cautious stance on cutting interest rates, and prioritizing that adds another layer of uncertainty in the market. For those holding onto meme stocks, this signals a considerable increase in market volatility, making meme stocks’ high-risk, high-reward gamble remarkably less appealing in the current economic climate. Therefore, wisdom dictates steering clear of these meme stocks poised to continue shedding more value. With that said, here are three meme stocks investors should offload immediately.
Meme Stocks to Sell: GameStop (GME)
Video game retailer and the original meme stock, GameStop (NYSE:GME), has seen better days. With its stock price dwindling by more than 32% in the past year, GME’s financial woes are clearly evident. That decline is compounded by the firm’s recent decision to shut down its NFT Marketplace, reflecting the struggle against the tide of digital transformation within the gaming sphere.
GME’s latest quarter earnings further underscore its lackluster attempt to revive its business. Revenues tumbled to $1.08 billion, marking a 9.1% decline year-over-year (YOY) while falling short of forecasts by a substantial $103.9 million. That setback, coupled with a 5.3% dip in total assets and a staggering 99.2% fall in free cash, paints a worrying picture of GME’s financial health. TipRanks analysts also signal caution with a Moderate Sell rating on GME, alongside a stark forecast suggesting a potential 55.6% decline.
AMC Entertainment (AMC)
Top movie theatre chain operator AMC Entertainment continues to navigate through turbulent waters, with its shares dwindling by a worrying 94% over the past year. A series of lackluster performances at the box office and step-changes in the sector via streaming continue to weigh down AMC’s business. Adding to the challenges, the Hollywood writers’ and actors’ strikes further delayed projects, dimming AMC’s near-term prospects.
In stabilizing its financial situation, AMC announced plans to issue up to 40 million new shares in September last year, which led to a sharp decline in its stock price. This effort, combined with AMC’s debt-for-equity swaps to reduce its debt, has only diluted shareholder value, increasing skepticism among analysts.
Furthermore, its upcoming quarterly earnings forecast paints a bleak picture for AMC, with revenues expected to drop from $1.18 billion to $1.05 billion YOY. Earnings-per-share (EPS) is also predicted to fall to a negative 65 cents. Consequently, Quant analysts‘ Strong Sell recommendation further highlights AMC’s uphill battle.
FaZe Holdings (FAZE)
FaZe Holdings (NASDAQ:FAZE), a popular player in the eSports realm, has seen its stock price drop by a precipitous 72.05% over the past year. A lot of it has to with it being embroiled in controversy, with allegations of its members’ involvement in crypto scandals. These incidents have had a major impact on its reputation, resulting in suspensions, while amplifying ethical concerns within the community.
Moreover, since its 2022 Initial Public Offering (IPO), FAZE has struggled with internal discord and the ethos that propelled it to fame initially. That misalignment triggered a mass departure of key members who are now pursuing solo influencer careers, further diminishing the firm’s market value.
Financially, the scenario is equally grim. YOY sales growth in Q3 declined by 10.7%, while gross profit took a 75.98% hit, indicating major operational challenges.
On the date of publication, Muslim Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
