One year ago, the shares of a struggling video game store called GameStop rose by 90%, and then another 60% in the afternoon. One week later, the start of “meme stock mania,” when people bought stocks that had been written off or shorted by professionals.
There were a lot of people who thought that the way people invest would change forever because of meme culture on social media, no-fee platforms like Robinhood, and a lot of people who didn’t like the Wall Street “suits.”
Yes, or maybe. Jan. 26, 2022, is the day that GameStop and AMC look more like MJ on the Wizards.
Shares of both GameStop and AMC have lost a lot of money this year. Both are down at least 35% year-to-date (though their share prices remain well above their pre-meme stock days).
And even though there have been a few crypto-related stunts that tried to capitalise on their godlike status among individual traders, both meme stock darlings have had to deal with real-world problems. AMC, for example, is reportedly trying to get rid of its high-interest debt at a time when movie ticket sales aren’t even close to what they were before the pandemic.
Big picture: People seem to be less excited about meme stocks in general.
Meme-friendly stocks have been the subject of a number of new financial products in the last year. One of these is the FOMO ETF. But the only thing that the ETF doesn’t have is meme stocks. It has a big stake in energy company Chevron, and 40% of the fund is in cash, Bloomberg says. People who work there say that this strategy “puts me to sleep.”
Power users have moved on to other stock forums from Reddit’s Wall StreetBets, where the craze started. Some say constructive feedback has been replaced by “cheerleading,” according to the Wall Street Journal. That’s down from 47,000 last November. The average number of comments on the main WSB page was about 27,000 at that time.
Retail traders may once again work together to bring back a dead company. As long as the market is on the verge of a correction.