Yahoo Finance GameStop vs. AMC: Which Meme Stock Is a Better Investment Today?
The recently released movie “Dumb Money”, about a YouTube content creator who encourages his followers to invest in heavily-shorted stocks, has stirred up more discourse regarding meme stocks.
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Having been over 2 years since meme stocks first went viral, are meme stocks still a place to put your money?
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What Is a Meme Stock?
The answer to this question: In 2021, meme stocks, or stocks that are greatly influenced by social media, took off in popularity.
Meme stocks gained traction in part due to popular online forums such as the r/WallStreetBets subreddit. On these forums, users were encouraging others to buy and hold heavily shorted stocks, two of the most popular being AMC and GameStop.
What ensued was a meme stock frenzy, in which key meme stocks skyrocketed in value over a short period of time.
“The craze spread as social media debates picked up steam, grabbing the attention of the mainstream media and luring retail investors looking to overthrow institutional control,” reported Forbes Magazine.
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High Risk, Unknowable Rewards
The problem with short-term speculative trading on shorted stocks is the high risk and potentially unknowable rewards. Such stocks are typically considered to be a risky gamble.
“The excitement [of meme stocks] has since ebbed, even if it hasn’t gone away completely, and traders who bought shares [during the meme stock craze] would now be deeply in the red,” CNBC detailed.
As always, it is essential to do your due diligence when considering investing in certain positions. Falling victim to the herd mentality that comes with meme stocks, or investing emotionally, can often lead to losing money.
GameStop vs. AMC
When debating whether to invest into GameStop vs. AMC, the best answer may be to invest in neither.
Meme stocks are volatile. Essentially, you are investing your money and betting on the whims of the Internet — and the Internet can be a fickle place. Celebrities or politicians can go viral and suddenly are viewed in an unfavorable light. Old tweets can resurface and destroy careers.
By investing in a meme stock — particularly in this case, where many analysts are suggesting that the bull run is over — and placing your money on what other people say online, you could potentially find yourself in the red.
“GameStop’s stock has experienced a significant selloff since the beginning of 2024, with shares declining by approximately 20% by February 6,” TheStreet detailed.
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This article originally appeared on GOBankingRates.com: GameStop vs. AMC: Which Meme Stock Is a Better Investment Today?
