One of the latest meme stocks to capture investor imagination was Roblox (NYSE:RBLX). The company went public via a direct listing on March 10 and shares quickly advanced far beyond the $45 initial price. Not only have the gains held, but RBLX is now up to over $70 per share.
And with $1,400 stimulus checks hitting the bank accounts of many Americans, it won’t be surprising for Wall Street to see another surge in the meme stocks. Writing for Wealth Daily, Monica Savaglia reported that Deutsche Bank estimates approximately 50% of the 25- to 34-year-olds the bank surveyed plan to invest at least half of their stimulus money in stocks.
These retail investors began dominating the headlines in January. The significance of this new breed of day traders has grown during the pandemic. And to be fair, these investors have had some successes. Of course, they’ve also learned some painful lessons.
Why do they do it? Maybe it’s sentimentality, maybe it’s stubbornness or perhaps just a case of FOMO (fear of missing out). Whatever the motivation, this trend is likely to continue.
So here are seven meme stocks that may benefit from the government’s largesse. Whether they should or not is for you to decide.
- GameStop (NYSE:GME)
- AMC Entertainment (NYSE:AMC)
- Blackberry (NYSE:BB)
- Curaleaf Holdings (OTCMKTS:CURLF)
- Nokia (NYSE:NOK)
- Zomedica (NYSEAMERICAN:ZOM)
- Netflix (NASDAQ:NFLX)
Meme Stocks: GameStop (GME)
Any list of meme stocks that doesn’t include GameStop would be incomplete. Nowadays, GME stock is trading nowhere near its 52-week high of $483. Still, the stock is trading up over 5000% over the last year. At this point, the bulls and bears have said whatever there is to be said. The company was experiencing declining revenue prior to the pandemic. This wasn’t just a Covid-19 story.
Nonetheless, the company seems to have some legitimate true believers. And while those investors may turn out to be right, it’s hard to see GameStop as a $120 stock.
That being said, earnings reports can make a difference. And in the case of GameStop, it has a huge one on deck in late March. Investors will be looking to see if indeed the bullish argument for a new console cycle boosted sales. They’ll also be looking for evidence that the company’s new CEO, formerly of Chewy (NYSE:CHWY) has a plan that will allow the company to compete effectively in a crowded online space.
If either or both of those premises look favorable, GME stock may have much more room to grow.
AMC Entertainment (AMC)
Another of the usual suspects among the meme stocks is AMC Entertainment. And I see a lot of chatter in trading forums that suggest AMC stock will be a target for stimulus funds. However the case for AMC is a bit more bullish.
For starters, the company recently announced that 90% of its theaters are open nationwide. That doesn’t mean that the days of sold-out cinemas are here — attendance at the movie theater was declining even before the pandemic.
However, the bullish case centers around pent-up demand, and the fact that AMC is likely to capture additional market share as smaller theaters may not have survived the shutdown. And with the company’s finances in slightly better shape, bankruptcy concerns are off the table at least for the next year or so.
The most bearish analysts see AMC stock trading at $1 or $2 per share. That’s likely too bearish, but this may be a case where the good news is already priced in.
Blackberry was swept up in the first wave of the meme stocks craze. It’s since fallen back a bit, but this may be one that the Reddit crowd got right. Blackberry has always been, at its core, a software company. It became a mobile device phenomenon in the early 2000s. And after that cycle ended, it was a long, hard fall.
But the company is rebounding on the strength of its competencies in cybersecurity and tracking. Blackberry recently scored a key partnership with Microsoft (NASDAQ:MSFT) for its Microsoft Teams platform.
And one of the more intriguing platforms that is propelling BlackBerry forward is its Intelligent Vehicle Data Platform, IVY. The platform got a huge boost of credibility when the company announced a partnership with Amazon (NASDAQ:AMZN) that may push the company into the forefront of developing common APIs for connected vehicles.
As of this writing, short interest in BB stock is rising, which may keep some traders away from the stock. However, for bullish investors willing to hold on, an attractive price target may set up in the not-too-distant future.
Curaleaf Holdings (CURLF)
You can’t have a list of meme stocks to bet on without one cannabis stock. Sundial Growers (NASDAQ:SNDL) has been getting a lot of attention. However, if you must bet on cannabis, I think Curaleaf carries much less risk.
New York has recently announced plans to put legalizing cannabis on the ballot. If passed, New York would be one of the most significant on the list of states that have voted to legalize marijuana. While there is some hope that the President Joe Biden administration will move to legalize cannabis at the federal level, there doesn’t appear to be any real traction for that. This simply means that the move towards legalization will have to happen on a state-by-state basis. That’s a strategy that will garner urgency as many states look to shore up their damaged budgets.
But as the U.S. comes online, it’s smart for investors to look at the multi-state operators, of which Curaleaf is the largest. The company just posted blowout earnings in which revenue grew 183.5% in the last year. Cannabis remains a speculative market, which is why investors should look at proven performers that have a distribution plan established in the country.
Pet care has grown at twice the rate of our nation’s GDP since 2007. In fact, pet care is projected to be a $205 billion industry by 2025. That’s a primary reason why many traders have included Zomedica in the list of meme stocks. I even suggested that risk tolerant investors might want to give it a look.
The reason is that the company is preparing to launch a point-of-care test, Truforma, which diagnoses thyroid or adrenal issues in dogs and cats. And the company recently announced that it will launch Truforma earlier than was thought.
But investors should proceed with caution with ZOM stock. A range of outcomes is possible. And the company itself concedes that it will only capture a small fraction of the total global diagnostic market.
It’s true that if you wait for proof of sales the easy gains will be gone, but this is a company that has a history of burning through cash with nothing to show for it.
I’ve been bearish on Nokia for the better part of a year. The simple reason is that the company continues to underdeliver in terms of revenue. At a time when its competitors have made great strides in the 5G revolution, Nokia has been largely left behind.
So is this time different? Maybe and since NOK stock seems to be a favorite of the meme stock crowd, it’s enough to give it a speculative nod. Let’s call this a “if at first you don’t succeed” play.
The company announced in January that is was ready to commence its 5G build out in the United States and that it targeting the Internet of Things (IoT) sector. And more recently, Nokia announced a partnership with Microsoft, Amazon and Google (NASDAQ:GOOG, NASDAQ:GOOGL) that will feature the company’s radio access network (RAN) technology in a cloud-based 5G radio solution.
However, Nokia recently announced that it was shedding 10,000 jobs, partially to pay for the restructuring effort. While that’s never a good outcome for the company’s employees, it’s an outcome that’s usually looked upon favorably by shareholders.
Netflix may seem like a poor candidate to include in a list of meme stocks, but there is a case to be made. NFLX stock is down about 2.3% year to date, after the recent selloff in tech stocks.
However there are two catalysts for Netflix. First, the company recently announced it would be cracking down on users who are accessing the streaming service via another user’s password. Plus, the company is seeing increasing subscriber numbers in other countries, which is where the real growth will come from.
Second, the company continues to develop original content. And if the Oscar Awards is any indication, it’s paying off. The streaming giant received 35 Oscar nominations.
In a sense, an investment in NFLX stock is sort of a contrarian approach to AMC stock. The bearish case against Netflix is that the streaming field continues to get crowded. However, analysts project the company’s revenue will double to approach $52 billion in 2025 with earnings per share jumping 4x. And the company says it no longer needs to look for external financing to fund its day-to-day operations.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.