3 Meme Stocks to Sell in January Before They Crash and Burn
The U.S. economy is experiencing a surprising turnaround in inflation, cooling more quickly than expected in late 2023 after a rapid climb in 2021 and 2022. This disinflation is attributed to weaker goods prices and moderating service costs, particularly in travel. This backdrop has led to this list of meme stocks to sell.
Despite lingering risks, including geopolitical issues, the trend suggests a potential continuation of moderation, possibly leading to lower interest rates from the Federal Reserve in 2024–the 2024 US economy will perform well.
This means that the market will head toward growth and meme stocks will not be sustained. You need to sell these 3 companies now and diversify your portfolio.
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GameStop Corporation (GME)
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GameStop Corporation (NYSE:GME) is a consumer electronics, and gaming merchandise retailer and the largest video game retailer worldwide.
GME stock has been down 31.55% to $16.36 in the past six months, putting it in an extremely unattractive position for investors. The Video Games market in the United States is projected to grow at a CAGR of 9.99%, resulting in a projected market volume of US$103.80 billion by 2027.
GME demonstrates shaky financials. Cash from investing YoY decreased 243.67% to -$222.70 million, and total assets are down 11.03% YoY. Additionally, cash from financing has decreased by 100.66% to -$7.90 million, and net change in cash has gone down to -$123.90 million, showing the lack of confidence and stability through management decisions in the company’s financials.
While GME stock has declined, compared with the S&P 500 index’s gain of 5.44%. This is largely due to events like the firing of its CEO and reporting lackluster sales, contributing to its struggle to revive stores.
With GameStop stock currently sitting at $16.36, many feel it is overvalued. This new development is for a further decline, extending its bearish outlook. The retail video game sector shows signs of slowing down, and GME is leading the way through poor financials and management. This makes it one of those meme stocks to sell.
Faze Holdings (FAZE)
Source: Roman Kosolapov/ Shutterstock
Faze Holdings (NASDAQ:FAZE) is an esports entertainment firm based in gaming culture. It has an array of influencers under its belt, including top names in the gaming community, amassing millions of followers across multiple platforms.
However, this organization has faced volatility in the past which persists today. Since the IPO in 2022, the company’s business management and the ethos that had gotten it famous were not aligned. This led to many members effectively leaving and proliferating as individual influencers, at the cost of the firm’s market value. Additionally, crypto scandals that FaZe members were allegedly involved in subtracted from its credibility.
Financially, FaZe has shrunk substantially. Its stock value has gone down -89.43% YTD, reflecting slowing business. Many major indicators of financial success– YoY revenue growth (down 10.7%), Gross Profit (down 84.8%), Gross Margin (down 83%), and net income (down 94.5%), – show volatility and declining potential.
There haven’t been any recent company developments for FAZE. The last major deal closed was between it and SteelSeries, regarding branded merchandise. However, this deal failed to affirm investor confidence, ultimately having no impact on the firm’s stock price.
The combination of terrible financials, poor company culture, and scandals have led this stock to underperform, making this one of those meme stocks to sell.
AMC Entertainment (AMC)
Source: Ira Lichi / Shutterstock.com
AMC Entertainment (NYSE:AMC) is a movie theater chain company, being the largest movie theater chain globally. AMC has the largest share of the U.S. theater market ahead of Regal and Cinemark Theatres.
AMC stock is down 82.81% to $5.30 in the past year, putting it in an extremely unattractive position for investors. The Entertainment market is projected to reach a valuation of $53.13 billion by 2027, growing at a 10.64% CAGR.
AMC showcases poor financials. Cash and Short-term investments YoY decreased 60.35% to $631.50 million, and total assets are down 15.58% YoY. Additionally, cash from financing has decreased by 104.59% to -$91.30 million, and net change in cash has gone down to -$965.90 million, showing a lack of confidence and stability on management’s part through financials.
AMC’s stock has significantly decreased when compared with the S&P 500 index’s gain of 22.1%. This is largely due to events like the approval of a revised stockholder settlement, which will allow AMC to issue more shares and raise capital.
Analyst sentiment is that AMC stock is overvalued. This new development primes AMC for more downturn with the stock currently poised for bearish returns. The entertainment sector shows signs of slowing down, and AMC is leading the way through poor financials and management.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Michael Que is a financial writer with extensive experience in the technology industry, with his work featured on Seeking Alpha, Benzinga and MSN Money. He is the owner of Que Capital, a research firm that combines fundamental analysis with ESG factors to pick the best sustainable long-term investments.
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