BB - Stop Laughing: 3 Meme Stocks That Are No Longer Funny
2024-07-10 08:06:00 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Meme stocks to sell continue sounding the alarm bells this year.
However, this year’s explosiveness in meme stocks is notably subdued compared to the original retail trading frenzy. Hence, the stock market seems to have evolved, and smart money is now approaching these stocks with greater caution and strategy.
Moreover, according to Vanda Research , inflows into meme stocks are substantially lower compared to 2021, pointing to a steep decline in speculative interest. Also, most meme stock companies are struggling fundamentally and will continue burning investor value for the foreseeable future. Therefore, investors tempted by past gains should consider the risks involved with long-term financial erosion.
Keeping that in mind, here are three lackluster meme stocks to sell. They offer little upside potential, and their dreary underlying businesses and dim prospects make it best to steer clear of them now.
AMC Entertainment (AMC)
Since the height of the meme stock craze in 2021, AMC Entertainment (NYSE: AMC ) has seen a stark reversal of fortune.
AMC stock trades for a mere $5 per share, representing a catastrophic drop of over 99%. This incredible downturn is linked to its aggressive strategy of issuing new stock, which has increased its share count from 23.6 million pre-pandemic to 295 million today.
Moreover, from a financial standpoint, AMC continues to buckle under the weight of its debt load. The embattled theatre chain operator’s long-term debt is north of $4.5 billion, excluding the $4.42 billion operating lease obligations through 2029. These obligations constrict the firm’s ability to maneuver financially, weighing down efforts to rejuvenate its core cinema operations.
In addition, AMC has to contend with the broader decline in movie-going, propelled by the rise of streaming services. As foot traffic drops and revenue streams dry up, AMC faces an uphill battle to reclaim its former glory.
BlackBerry (BB)
BlackBerry (NYSE: BB ), the former smartphone titan , has stumbled in its transition to a cybersecurity and IoT specialist.
Despite its best efforts, it hasn’t been able to turn things around, as evidenced by its dwindling financial health. In its most recent quarter, BB reported a net loss of $42 million, more than a 280% increase from the $11 million loss recorded in the prior-year period.
Revenues similarly paint a remarkably bleak picture, plummeting 61% to $144 million in the first quarter (Q1) from $373 million in the previous year. Amidst these ongoing troubles, the firm seeks to separate its cybersecurity unit from its IoT division while implementing belt-tightening measures.
It recently laid off 200 employees while shutting down six of its 36 global offices . Hence, the ongoing losses and a notable decline in its IoT business pose serious questions about the viability of its business model in a hotly competitive environment.
MicroStrategy (MSTR)
Software giant MicroStrategy (NASDAQ: MSTR ) has made major trades in cryptocurrency and paid maidens in the past year. MSTR stock gained upwards of 239% last year as it continues loading up on Bitcoin.
It recently purchased an additional 11,931 BTC for $786 million under the guidance of Executive Chairman Michael Saylor. Following the massive purchase, the company’s BTC holdings now stand at a staggering 226,331, valued upwards of $15 billion.
However, the firm’s heavy reliance on the notoriously volatile crypto market makes it prone to significant downside risk. Though the recent surge in BTC prices has bolstered its Bitcoin prices portfolio, the crypto market’s inevitable fluctuations pose serious questions about its future. Moreover, we’re already witnessing this vulnerability as MSTR stock plummeted more than 24% in the past month. Also, the trajectory of MSTR’s stock is fraught with uncertain losses ahead.
On the date of publication, Muslim Farooque did not have (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 .
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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