We’ve all heard of FAANG companies but the recent social-media frenzy has birthed a new group of stocks: BANG stocks. The acronym stands for Blackberry, AMC, Nokia and GME.
These four companies saw a massive spike in their share prices after retail investors on Reddit sparked a trading frenzy. While not all stocks have enjoyed the same level of gain, the shares are up significantly from last year.
According to The Wall Street Journal, there is a method to the madness of the so-called “meme stocks.” Investors tend to pick stocks at low prices with a low trading volume. This helps traders accumulate a large number of shares at a cheaper valuation which can have a significant impact on the price.
However, companies with a large trading volume tend to have little to no movement when mentioned on the Reddit forum.
As social-media-driven investments take over Wall Street, it’s worth taking a look at the BANG stocks. Here’s are the four companies that got their claim to fame after Reddit investors banded together to push their prices up.
BANG stocks: Blackberry (BB)
Blackberry stock is up more than 100% this year following a mention on the now-famous Reddit-forum, r/WallStreetBets.
Although the company hit a rough patch after declining sales of its namesake smartphone, it has made recent strides with the development of new software.
While Blackberry does provide strong fundamental value, it still does not justify its momentous run.
Stocks that pushed forward as a result of the Reddit-fueled frenzy are known to be very volatile. So while Blackberry does have long-term value, I wouldn’t recommend playing this stock for its short-term gains.
Real investment value comes from stocks with a long-holding period and as such playing the short-game is not the way to go. If anything, the volatile price movements present a great opportunity to buy BANG stocks like this one on the dip.
AMC, the world’s largest movie theatre chain was on the brink of collapse following a year of closures and losses. Then, in what can only be described as a surprise ending, shares of the company saw a massive uptick following a mention on the r/WallStreetBets forum.
In just 24 hours, the BANG stock was up 300% with the hashtag #SaveAMC trending on social media. While its price is down considerably since then, the price rally helped the movie theatre chain avoid bankruptcy by a hair.
The capital infusion by retail investors is great news for AMC, but fundamentally speaking the company still has a long way to go to reach its pre-pandemic status.
Movies are expected to return to the big screen this year and this could help AMC fill up seats again. Highly-anticipated films like Black Widow and Spiderman are set to release this year. The future seems optimistic for AMC but I would hold off on making any big moves until it attracts big crowds again.
Finnish company Nokia was among the stocks that rallied from the Reddit-trader momentum. The once-famous mobile manufacturer saw its share price increase by 70% from its lows in November.
Although it was not directly impacted by the pandemic, the telecom stock got a new lease on life after it was overshadowed by bigger players in the space for many years. However, this surge is the result of the retail trading frenzy and is not a reflection of improvements by Nokia.
The legacy phone-maker is trying to make a comeback by positioning itself as a leader in the 5G market. Nokia has formed several partnerships with companies like T-Mobile (NASDAQ:TMUS) and Google (NASDAQ:GOOG, NASDAQ:GOOGL) to help further this goal.
However, it’s worth noting that the telecom firm continues to face lots of competition from companies at home and abroad. Hence, Nokia has a lot of headway to make on that front. Once again, this “Reddit stock” isn’t a good buy for its short-term price movements, but it’s worth watching for its long-term potential.
Last but certainly not least is the stock that sparked the Reddit saga. GameStop is a video-gaming retailer that operates a number of stores across the U.S., Canada, Europe and Australia.
Prior to the pandemic, GME was losing the videogame war to bigger companies that offered video games online. The pandemic amplified this loss with forced store closures. As Wall Street bet against the stock, it sparked a retail frenzy that pushed the BANG stock up by 1300%.
Prior to the rally, GME stock was trading at the $4 range as the company announced it would shut down 300 stores at the start of the pandemic. Although the price is up considerably since then, there is no indication if this situation has improved.
Chewy’s founder, Ryan Cohen’s involvement with the company helped spark the initial rally. The specifics of the e-commerce initiative are yet to emerge, and it would be best to hold off on the stock until there are improvements to GameStop’s underlying business.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for Investor Place since 2020.