As Meme Stock Mania Fizzles sees, Wall Street sees ‘Big Reckoning’

Photographer: Tiffany Hagler-Geard / Bloomberg

The daily Reddit crowd turned the first quarter of 2021 into one of the wildest periods of stock market mania in modern history. Books – plural – will undoubtedly be devoted to the subject in the coming years.

But after this small time, speculators banded together to chase hundreds or even thousands of tens of thousands of equities. percentage – and in the process burned some hedge fund barons betting on declines – the movement appears to be. An index that tracks 37 of the most popular meme stocks – 37 of the 50 that banned Robinhood Markets clients from trading during the frenzy – has remained virtually unchanged over the past two months after rising nearly 150% in January.

Talk to Wall Street veterans and they will tell you that this flat lining is the beginning of a relentless move down in these stocks.

It’s not so much about the poor fundamentals of the companies. At least not in the short term. The zealots in day trading have a surprising ability to ignore the facts. It is more that as the pandemic slowly winds and the economy starts to open up, many of them will leave their homes and go back to offices and to restaurants and travel to and far. And as they do so, they can no longer be obsessed with their Robinhood accounts.

Their joint swing across the home universe, in other words, will diminish.

“People are going to do other things,” said Matt Maley, chief market strategist at Miller Tobacco + Co. There will be a ‘big deal’ at some point, he said. “I have no doubt.”

Of course, the Wall Street series read the Reddit crowd in general earlier this term, and it is possible that their analysis is now wrong again. Preliminary data, however, indicate that they are correct.

Recent reports suggest that vaccinated Americans are planning long-term vacations in search of “Google flights, according to a Google Trends tracker, peaked at 100 this week. The opposite is seen for terms such as’stock trading ”and“investment ”which has fallen, Google Trends shows.

“The impact on retail trading is declining,” said Edward Moya, senior market analyst at Oanda. “Many Americans largely want to attend sporting events, travel nationwide, vacation, visit family and friends, and renovate wardrobes before going to restaurants, bars, and returning to the office.”

Read more: Americans signal that they will spend incentives on travel, not GameStop

Gamestop Juggernaut

Video Game Retailer GameStop Corp. became the sticker child for retailers who wanted to rage against the hedge fund elite. However, the stock is 2.460% roller coaster along with other favorites viewed on Reddit’s WallStreetBets thread caused just as much pain as joy.

The rise of more than 900% in the stock cautiously aroused the Wall Street analysts who followed. The 12-month average price target implies that the stock will lose more than three-quarters of its value compared to current levels. Only Jefferies has a price target near Thursday’s $ 191.45 close and the call comes with the warning that stocks are “subject to volatility beyond the fundamental principle.”

But any sense of GameStop trading on fundamentals has been ignored since it first enchanted Wall Street and Reddit users in mid-January. Bulls like to address their commitment on forums as a step to keep it at short sellers as they buy into a rebirth of the company provided by activist Investor Ryan Cohen.

Read more: GameStop adds another Amazon driver to the team

Gave AMC Entertainment Holdings Inc. ‘s position as a movie theater that many Americans have gone to at some point is not a surprise why Reddit users rushed to the company’s aid. #SaveAMC appeared on Twitter and amateur investors more than happily fought Wall Street’s skeptics, despite the fact that most movie theaters were closed due to the ongoing pandemic.