Reddit-led meme stock gains evaporate

Remember AMC? Shares in the US movie chain operator went bananas during the 2021 meme stock mania, soaring 2,850 per cent. Those gains have now been completely erased, notes Creative Planning’s Charlie Bilello, following a 98 per cent share price collapse.

Warren Buffett famously said the market is a voting machine in the short run, but a weighing machine in the long run. AMC’s demise, says Bilello, is proof the weighing machine “always wins out in the end”.

The weighing machine arguably still has some work to do. For example, the Roundhill Meme exchange-trade fund (ETF), which tracks various meme stocks, tanked last year but is up almost 40 per cent in 2023.

Still, Bilello’s point is largely true. The quintessential meme stock, GameStop, has fallen 80 per cent since 2021′s peak. Another favourite, Bed Bath and Beyond, filed for bankruptcy in April. The aforementioned Roundhill ETF has been a lousy investment since launching in late 2021.

On the Money: the personal finance newsletter from The Irish Times

---

Hosting language students can boost your family’s finances

---

Insurance board’s Rosalind Carroll: ‘Soft tissue neck injuries are not coming as they would have before’

---

The outlook for interest rate cuts is changing - so should Irish borrowers be worried?

---

[ Short squeeze: what exactly is going on at Gamestop? ]

2021′s meme stock craze will be documented in the upcoming movie Dumb Money. Trailers indicate a David v Goliath narrative, with Redditors taking down short-selling hedge funds. In reality, the shorts were right. Betting on meme stocks has been a losing bet.