Meme stocks might be on their way out as fundamentals return as the market’s investment standard. Though there will always be another pump-and-dump or overhyped stock surging well past its fair value, meme stocks to sell are those past their prime.
But a handful of struggling meme stocks are hanging on. Yes, we’ve seen the demise of Bed, Bath, & Beyond, WeWork and more—but some of their meme stocks peers and legions of bagholders cling to hope of a rebound or short squeeze.
Unfortunately, that day isn’t coming anytime soon for these three meme stocks. Instead, they’re among the top meme stocks to sell—if it isn’t too late.
Plug Power (PLUG)
Hydrogen fuel cell developer Plug Power (NASDAQ:PLUG) started its Wall Street journey on the wrong foot. Soon after its IPO, a class action lawsuit alleged that the company misled investors. Just last year, PLUG saw further legal trouble as the SEC fined management $1.25 million after some accounting tricks came to light. With its long, checkered history, is it any wonder the stock is down more than 95% from recent highs?
But there’s still further to fall, even as PLUG trades firmly within penny stock territory. Shares fell off a cliff this week after the company announced a $1 billion equity offering to raise much-needed cash, massively diluting the handful of meme stock hopefuls hanging on. Next week marks a much-anticipated annual business update from the fuel cell company. Whether good news comes from the call remains to be seen, but if you haven’t cut this meme stock loose yet, doing so before the 23rd might be the best course of action.
Rivian Automotive (RIVN)
Times are tough for EV manufacturers everywhere as demand falls. But few EV meme stocks are hanging on by a thread as much as Rivian Automotive (NASDAQ:RIVN). True, the meme stock’s story and proposed value are attractive—but in today’s fundamental-driven market, good stories don’t make a stock worth buying.
That optimism/reality mismatch came to a head this week after shares dropped following a Deutsch Bank downgrade for the meme stock. In the note, analyst Emmanuel Rosner pointed to the “downside [of] expectations around volume and gross margin,” with further concerns about the “timing of capital needs, production ramp, and profitability.”
In other words, where the rubber meets the road, Rivian can’t get rolling fast enough or efficiently enough to propel itself past meme stock status. We have to wait until late next month to see just how tight the company’s position is, but if its last filing indicates, there’s not much upside left for the stock. Notably, in an era where cost-cutting is supreme, the company’s R&D and SG&A costs surged. This kind of financial bloat is a ZIRP-era holdover and is not suited to today’s economy.
AMC Entertainment (AMC)
After Gamestop (NYSE:GME), the top meme stock is undoubtedly AMC Entertainment (NYSE:AMC). But, unlike Gamestop (which stabilized close to where it should trade), there’s no hope left for AMC. The stock has few opportunities to mount a practical comeback after further dilution sacrificed existing shareholder stakes for a quick cash infusion. Their solution?
Instead of focusing on getting movie watchers in seats or realigning its capital structure to face new realities, AMC’s management decided that “more than a year of study and close collaboration with top confectioners to create premium gourmet chocolate candies.”
We all know that film house margins are razor-thin, and most of their cash comes from concessions—but is spending a year and untold capital on developing in-house candy brands the right move? We’ll see how the company’s earnings pan out next month, but the answer is a resounding no at first glance.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.