The popularity of meme stocks shot up last year, with heightened social media influence on speculative trading. Video game retailer GameStop Corporation (GME) is a case in point. It experienced an unprecedented surge in value, despite its bleak underlying fundamentals.
As a group, the value of popular meme stocks peaked on Feb. 9, 2021. However, they have since experienced a sharp decline, down $191 billion from their peak. And Craig Birk, Chief Investment Officer at financial company Personal Capital, believes now that the ‘speculative frenzy’ of meme stocks has faded away.
Therefore, we think it might be best to avoid meme traders’ favorites, AMC Entertainment Holdings, Inc. (AMC), BlackBerry Limited (BB), and Bed Bath & Beyond Inc. (BBBY), given their bleak fundamentals.
AMC Entertainment Holdings, Inc. (AMC)
AMC operates in the theatrical exhibition business. The Leawood, Kans.-based company owns, operates, or has interests in theaters. It operates across several theaters and screens in the United States and globally.
On Nov. 15, law firm Miller Shah LLP issued a notice of a class action lawsuit settlement, with a Feb. 10, 2022, hearing date. According to the settlement, AMC, on behalf of all defendants, is expected to deposit into a Settlement Fund $18 million in exchange for the dismissal of the suit absent lingering prejudice.
AMC’s operating costs and expenses increased 14.3% year-over-year to $908.40 million in its fiscal third quarter, ended September 30. Its net loss attributable to AMC came in at $224.20 million, while loss per share stood at $0.44.
Analysts expect AMC’s EPS to remain negative, at least until the fiscal year 2022.
The stock has declined 56.6% over the past six months to close yesterday’s trading session at $16.06. It has declined 41% over the past month.
AMC’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, which equates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AMC has a Value and Stability grade of F and a Sentiment and Quality grade of D. In the 9-stock Entertainment – Movies/Studios industry, AMC is ranked #7. The industry is rated F. Click here to see AMC’s additional POWR Ratings for Growth and Momentum.
BlackBerry Limited (BB)
BB is an intelligent security software and services provider to governments and enterprises worldwide. The Waterloo, Canada, company delivers AI and ML technology solutions in different areas.
For its fiscal third quarter, ended November 30, BB’s revenue decreased 15.6% year-over-year to $184 million. Its gross margin was down 21.5% from the prior-year period to $117 million. For the nine months ended November 30, net cash provided by operating activities stood at a negative $37 million, down 223.3% from the same period the prior year.
The negative $0.03 consensus EPS estimate for the quarter ending February 2022 indicates a 200% year-over-year decrease. And the $208 million consensus revenue estimate for the same period reflects a 3.3% decline from the prior-year period.
Over the past year, BB’s stock has declined 41.6% in price to close yesterday’s trading session at $8.23. It has declined 19% over the past six months.
It is no surprise that BB has an overall D rating, which translates to Sell in our POWR Rating system. Also, the stock has a D grade for Momentum, Stability, Sentiment, and Quality. It is ranked #49 of 56 stocks in the Technology – Communication/Networking industry. To see the additional POWR Ratings for Growth and Value for BB, click here.
Bed Bath & Beyond Inc. (BBBY)
Union, N.J.-based BBBY operates a retail store chain through North American Retail and Institutional Sales segments. The company sells domestic merchandise, bath items, kitchen textiles, and home furnishings.
On November 2, the company announced the launch of its digital marketplace and a strategic collaboration with The Kroger Co. (KR) to offer KR customers BBBY’s assortment of home and baby products. However, the gains from this venture might be spread over an extended period.
BBBY’s net sales decreased 28.3% year-over-year to $1.88 billion in its fiscal third quarter, ended November 27. Its adjusted net income and adjusted net EPS came in at a negative $24.57 million and a negative $0.25, respectively, down 335.5% and 412.5%, from the prior-year period.
The Street expects BBBY revenue to decrease 20.4% year-over-year to $2.09 billion for its fiscal fourth-quarter ending February 2022.
BBBY’s shares have declined 54% in price over the past year and 43.1% over the past six months to close yesterday’s trading session at $16.24.
BBBY’s poor prospects are reflected in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system. BBBY has a Sentiment grade of F and a Stability grade of D. It is ranked #53 of 61 stocks in the Home Improvement & Goods industry.
In addition to the POWR Rating grades we have stated above, one can see BBBY ratings for Growth, Value, Momentum, and Quality here.
Note that BBBY is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio. Learn more here.
AMC shares were trading at $17.44 per share on Tuesday afternoon, up $1.38 (+8.59%). Year-to-date, AMC has declined -35.88%, versus a -5.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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