Meme stocks are seeing less interest this year than they were in 2020 and 2021. The logic is fairly straightforward: Rising inflation and subsequent quantitative tightening have reduced the availability of cheap capital. As a result, there is less speculation this year than in previous years.
That implies that meme stocks are solely speculative bets made by retail investors. However, that isn’t exactly the case. Many of the so-called meme stocks favored by retail investors are the same ones currently favored by big money, institutional investors. This includes companies like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG, NASDAQ:GOOGL). Hardly speculative investments.
However, not all of these investments are worthwhile. The following names are speculative meme stocks to sell.
GameStop (NYSE:GME) continues to be a meme stock to avoid. The reason is that its most recent decision to split its stock is little more than an attempt to further wring capital from retail stock investors.
Shareholders voted to expand the number of authorized shares from 300 million to 1 billion last month. And then the company announced plans to enact the split on July 6. That means shareholders of record on July 18 would receive an additional 3 shares of stock for every share they held.
The company’s market capitalization remain unchanged. The only difference is that shareholders suddenly have 4 times as many shares as of July 18.
In other words, a shareholder has four times as many shares priced at roughly one-quarter the price of what they previously were.
Generally speaking, stock splits are a positive sign. They make shares more accessible and indicate the company hopes to appeal to a broader base. But this isn’t a strong company with a share price that’s growing too fast. It’s a very unique stock attempting to take more capital from retail investors who will pay the price. Don’t fall for it.
Hawaiian Holdings (HA)
Hawaiian Holdings (NASDAQ:HA) stock represents a bit of a conundrum for investors. On the one hand, there was reason to be bullish a few months ago. The idea was that investors should simply disregard the fact that the company reported a $122.8 million net loss in Q1.
Why? A presumed return to full business operations as Covid-19 lockdowns became a thing of the past. Pent up travel demand, especially to locales like Hawaii, was expected to reverse poor operational results for firms, including Hawaiian Holdings.
But the conundrum is that now Covid-19 is “over,” airlines are dealing with a new problem: Recession fears. Inflation hasn’t subsided despite the fact that the Federal Reserve has aggressively raised interest rates. Households are seeing the value of their dollars erode fast and that means discretionary spending for luxuries, including trips to Hawaii, is weakening.
In other words, HA stock rolled out of the pandemic and into another storm.
It seems that sooner or later AMC (NYSE:AMC) stock pundits will have to relent. They have been steadfast in their determination that the movie chain operator is a valid investment throughout the pandemic to today.
But all the signs indicate otherwise. Wall Street analysts give it a target price of $5.60 on average. That’s 60% lower than where it currently trades. Further, earnings estimates have been heading in the wrong direction for the last three months. Then it was expected the company would lose 14 cents per share. That figure has increased to a 20-cent loss per share with weeks left before earnings come out.
Of course, AMC fans don’t care. For the moment anyway. But sooner or later they’ll have to. One by one they’ll fall off as capital becomes more expensive and the realities of a contracting business model take their toll.
Beachbody (NYSE:BODY) stock is one that tried to benefit from the trend of at-home fitness during the pandemic. The price chart of Beachbody very closely mirrors that of Peloton (NASDAQ:PTON), which peaked above $160 in late 2020 and now trades for $10. Peloton has seen multiple executives leave the firm and weakening signals for the at-home workout trend.
Beachbody, for its part, came public in early 2021 with share prices above $10. It was clearly trying to catch on to the at-home workout trend in the hope that it was more than a passing fad. Unfortunately for the company, it doesn’t look to be.
On top of that, the company’s losses continue to mount. That would be bad even if revenues were increasing as growth stocks are out. But revenues aren’t increasing, making those rising losses doubly bad.
Copa Holdings (CPA)
Copa Holdings (NYSE:CPA) is a stock that you want to like but should be wary of. Investors cheer it for the fact that the Panamanian economy airline at least showed a profit in Q1. The $19.8 million net profit was far lower than the $89.4 million it reported in the same quarter in 2019, but positive nonetheless. Coming out of the pandemic that was a positive.
But the same problem that is plaguing every other travel company is plaguing Copa Holdings: Souring prospects. A few months ago, much more bullishness underpinned the firm, and thus CPA stock. More travel, fewer Covid-19 lockdowns, etc.
That notion was evident in earnings-per-share expectations, which reached $1.66 three months ago. They’ve since fallen to 80 cents. That’s why investors have to shy away from Copa Holdings right now.
Avoiding Netflix (NASDAQ:NFLX) stock is a matter of following subscriber losses. Netflix surprised the market when it reported a loss of 200,000 subscribers in its Q1 earnings report. That news was very unwelcome and sent shares tumbling.
But Netflix did nothing to assuage investor concerns at that time: Instead, the company then projected that it would lose an additional 2 million subscribers in Q2. However, it ultimately reported a much less significant loss of roughly 970,000 subscribers in Q2.
The company responded to the loss by promising to crack down on password sharing and revealed plans to add a subscription tier supported by ads. This is something the company had previously promised not to do. It seemed with each successive move, the stock was falling further.
Now it seems that things might get worse and that’s why NFLX stock must be avoided currently.
Vinco Ventures (BBIG)
Vinco Ventures (NASDAQ:BBIG) is a company that gets a lot of attention, yet has very little going for it. Generally speaking, that appeal could be boiled down to its short squeeze potential. It does have short interest approaching 17%.
But other than that there’s no reason to be invested in BBIG stock. The company losses phenomenal amounts of money, while barely bringing in any at all. In the first 3 months of 2021, the company posted $2.56 million in revenue leading to a net loss of $62.26 million. Back then, growth stocks had much more leeway.
Fast forward a year and Vinco Ventures managed to post $11.53 million in revenues. That’s a significant increase from the $2.56 million a year prior. But investors must beware that the company also lost $379.1 million in the quarter.
That prorates to well over $1 billion for 2022. There’s no good reason to expect investor capital to flow in even if we were in a period of quantitative easing. We aren’t, so stay away.
On the date of publication, Alex Sirois 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.