Meme stocks AMC Entertainment Holdings Inc AMC and GameStop Corp. GME are on the move once again this week, fueled by targeted buying campaigns driven by Reddit’s WallStreetBets community.
On Thursday, Bank of America analyst Jill Carey Hall said AMC and GameStop are flashing sell signals at this point — but there may be two new WallStreetBets stocks to watch in the week ahead.
Familiar Faces: Hall said AMC recently leapfrogged GameStop as the most-mentioned Russell 2500 stock on WallSreetBets during the last seven days as of Wednesday.
At this point, AMC and GameStop are by far the top-trending names on WallStreetBets, but Hall said buyers may be late to the game at this point.
“Our Equity Derivatives team notes that these two stocks exhibit all three signposts that have been associated with retail-led speculative rallies nearing their end (acceleration in price and stock volume, increase in volatility, and a turn lower in the call-to-put volume ratio),” Hall said Thursday.
Bank of America has an Underperform rating and $10 price target for GameStop and does not cover AMC at this time.
Fresh Blood: But while GameStop and AMC may be approaching the end of their rallies, Hall said biotech stock BioCryst Pharmaceuticals, Inc. BCRX and plant-based meat company Beyond Meat Inc BYND are on the rise in WallStreetBets mentions. Hall said both stocks have high short interest, and they both recently breached the top 20 in mentions for the first time since November.
Many experts anticipate the flood of new retail traders to dry up now that stimulus payments have likely ended and the economy is getting back to normal. Hall said she is expecting a moderation in retail trading activity in coming quarters, but notes that WallStreetBets could remain an important indicator of persistently elevated retail trading given the environment of free trades, remote work and high savings rates.
Benzinga’s Take: For meme stock traders who got burned during the previous run-ups in AMC and GameStop back in January, the recent rally has given those traders a rare second chance not to make the same mistake twice.
Even for long-term investors who believe GameStop and AMC’s struggling businesses will make 180-degree turns in the years ahead, it’s never a bad idea to lock in at least some of your gains after such a big run.
Photo courtesy of Beyond Meat.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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