Even as markets shift toward a turnaround, certain stocks are lagging behind. Many popular meme stocks still haven’t found any real momentum. Even as enthusiasm from retail traders remains high, the short squeeze that the r/WallStreetBets crowd has been banking on still hasn’t arrived.
With each passing trading day, any squeeze seems less and less likely. Just last week, retail traders were pushing hard for a short squeeze in Bed Bath & Beyond (OTCMKTS:BBBYQ) stock. Today, though, shares closed in the red by 3%. Things are even worse for Mullen Automotive (NASDAQ:MULN) stock, another unstable meme pick failing to see a squeeze. Despite chatter on social media, the writing is on the wall: Both of these names are stocks to sell.
These days, even strong social media pushes aren’t enough to generate even modest returns from retail traders’ meme favorites. These traders love to ask when their favorite stocks will see a short squeeze, but they’d be better served to ask which stock to drop before it’s too late. When it comes to BBBYQ versus MULN, the answer is both.
BBBYQ and MULN: Two Losing Stocks to Sell
It’s hard to speculate which of these names is a worse investment right now. Both companies are highly unstable and haven’t given investors cause for optimism in months.
True, Bed Bath & Beyond declared bankruptcy in April and began trading over-the-counter (OTC) soon after. Mullen hasn’t done either of those things. However, given its abysmal performance lately, the possibility of delisting certainly seems close. Last week, MULN stock fell because of its continued failure to comply with Nasdaq listing requirements. Shares of Mullen have shed more than 90% year-to-date (YTD).
So, Mullen and Bed Bath both belong on a list of stocks to sell because their prospects are truly bleak. That said, Bed Bath’s bankruptcy and delisting may push it just slightly above MULN as far as bad investments go. Most of what has pushed BBBYQ stock up lately has been pure speculation from desperate retail investors. Recently, rumors swirled that Ryan Cohen might place a bid on the company. Others have speculated that Carl Icahn could swoop in. When a stock is only rising on unsubstantiated hearsay, investors should stay away at all costs.
Of course, investors should still regard MULN with heavy skepticism as well. The electric vehicle (EV) producer has repeatedly demonstrated that even good news doesn’t help the stock rise. For example, shares fell last week after the company reported a “successful” debut at an industry-leading trade show.
The lack of enthusiasm around Mullen’s good news items is due in part to the company’s questionable fundamentals. InvestorPlace contributor Thomas Niel notes:
“All signs point to more shareholder value destruction ahead. As I argued earlier this month, Mullen needs to severely dilute shareholders once again, in order to both stay afloat, as well as to finance its EV production ramp-up. If the company raises these funds, and again ends up with little to show for it, MULN stock could experience another sharp plunge.”
Regardless of how Mullen’s management proceeds, the sharp plunge predicted by Niel is likely to happen, as it has many times before. No amount of clapping from retail traders will save either company. All told, these two stocks to sell make no sense for even the most risk-tolerant traders.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.