Both firms would go on to experience short squeezes in their stock, an essential ingredient to getting retail investors excited. To their credit, social media investors have identified striking parallels between Troika Media and GameStop. And management at the two companies have engaged in startlingly similar financial restructuring plans.
Opportunities for Growth
- Meme stocks often trade far above fair value.When sentiment shifts, they return to fundamental levels abruptly, catching late buyers off guard.
- It provides a quick snapshot of how much investors are willing to pay for each dollar of earnings, making it a useful metric for comparing companies within the same sector.
- Tom Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace.
- What begins as a joke or protest can evolve into a full-scale social media stock surge, turning obscure tickers into trending topics.
- The survival of AMC was guaranteed, and although hopes are that it should last for decades, it is still speculated that it could be a bubble that can burst anytime.
Keep core investments grounded in stable assets and treat these trades as short-term experiments. Monitoring forums and sentiment trackers helps spot early momentum.However, treat them as context, not confirmation. The louder the stock market buzz trend, the closer the cycle may be to peaking. While most meme rallies start with a short squeeze, some evolve into a gamma squeeze, where options activity accelerates buying pressure. Learn how a gamma squeeze magnifies volatility and fuels extreme price spikes. In this guide, we’ll break down how meme stocks work, what drives their wild swings, and what every trader should know before joining the next viral investing trend.
Emotional Trading Traps
Given these factors, I’m staying on the sidelines for now with a neutral outlook. The ad tech firm currently trades for a roughly $100 million market capitalization, valuing its shares at about 0.3X price-to-sales (P/S). That’s the same as GameStop’s valuation immediately before its short squeeze and about eight times lower than the average U.S. firm. In other words, it’s a siren’s call for deep-value investors looking for enormous returns.
Meme Stocks vs Traditional Stocks
Troika Media Group is an acquisitions company that can trace its roots back to Roomlinx, a Nevada-based firm founded in 1998. Over the years, the entity would purchase everything from broadband companies to brand consultancies. It wasn’t particularly successful; the firm averaged a $9.4 million loss per year and required a steady stream of stock and debt issuances to fill the gap. Understanding what is a meme stock means recognizing that emotion, humor, and community can move billions of dollars.
Community Power
Nevertheless, if we take a closer look at the projections for 2025, the outlook is far from satisfactory. The topline consensus points to GameStop ending Fiscal 2025 (in January 2024) at $4.02 billion—an annual drop of almost 24%. For Fiscal 2026, forecasts imply more losses ahead, with revenues reaching $3.75 billion, falling a further 6.7%. At the same time, the projections for the bottom line are profitability in Fiscal 2025, at 0.07 cents earnings per share (EPS), and breakeven in Fiscal 2026. For example, some investors see GameStop as a crypto-fueled powerhouse with a fair value above $120, while others regard it as highly speculative with a fair value closer to $12. The Price-to-Earnings (PE) ratio is a widely used valuation tool, especially for profitable companies like GameStop.
A Market Bull Just Turned Cautious – What It Means
According to Yahoo News, COVID-19 has helped the company realize its potential. The company estimates that by 2025, it will have established between 5 and 10 plasma centers. The third center could be up and running by April 2021, and if all the others go according to plan, the company shares could see a rise of 260% to reach a target price of $7. Similar to GameStop and AMC, however, Beyond Meat’s stress levels became a hotbed for day traders. A cauldron of rumors, narratives, and ambiguities about the convertible note and the overall health of the company fueled an acute rise in Beyond Meat’s stock price.
The biggest force behind this movement was traced to a forum on Reddit called r/wallstreetbets. Within this community, an investor named Keith Gill — who uses the pseudonym Roaring Kitty — identified an interesting pattern with GameStop stock. That followed a similarly large drop at the end of May when the company announced it had purchased 4,710 Bitcoin for roughly $500 million.
- Let’s take a look at the top stocks that might pique your interest.
- This tailored approach offers a clearer sense of what a “normal” PE ratio should be for GameStop specifically.
- On January 11, 2021, the company announced that it plans to carry out a study to evaluate how vilobelimab in combination with another drug could affect patients with squamous cell carcinoma.
- A meme stock’s lifespan is usually short; days or weeks at most.
In May, the company sold 45 million shares, raising $933 million, followed by another sale of 75 million shares in June, which brought in $2.1 billion. As a result, GameStop turned what was expected to be a tough year into one where its cash reserves skyrocketed from $1 billion to $4.6 billion. That said, GameStop’s management team, led by CEO Ryan Cohen, has handled recent events with remarkable precision, turning the company into a cash-rich business by conducting equity sales. As a result, it’s hard for bears to argue that GameStop’s outlook is entirely negative.
It’s also worth noting that GameStop has had almost no debt since 2021. Simply Wall St’s proprietary “Fair Ratio” goes a step further than basic comparisons. While industry and peer benchmarks are useful, the Fair Ratio bases its estimate on a more complete profile.
Like people bought GameStop stock resulting in the share value going up significantly, AMC experienced the same. Consequently, the $600 million debt was settled when holders of convertible bonds converted them at $13.51 per share. The survival of AMC was guaranteed, and although hopes are that it should last for decades, it is still speculated that it could be a bubble that can burst anytime.
Assessing GameStop’s True Value Amid Boardroom Shakeup and Flat Share Performance
This dynamic shows how crowd-driven market behavior can quickly turn speculation into sharp price movements. Even when trades don’t go as planned, meme stocks can teach valuable lessons about volatility, timing, and emotional discipline. Observing these dynamics helps new investors understand how sentiment affects market prices.
A cheap share price, the retention of Jeffries and the recent short squeeze all seem like a repeat of GME in 2021. This written/visual material is comprised of personal opinions and ideas and may not reflect those of the Company. The content should not be construed as containing any type of investment advice and/or a solicitation for any Forex trading tip transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. Our platform may not offer all the products or services mentioned.
