Basket of shares meme plummets to record lows

(Bloomberg) — A basket of so-called meme stocks that took Wall Street by storm in early 2021 slumped to an all-time low this week, erasing the last vestiges of the retail-investor-driven rally that made them famous.

The group of 37 trader-favorite retail stocks tracked by Bloomberg extended a four-day slide on Tuesday, wiping out nearly a fifth of its value in the past week as global markets tumbled on concerns of an impending recession. The index has lost 63% of its value since a January 2021 high.

Risky assets and former high-flying technology companies have been hit the hardest as investors respond to the Federal Reserve’s efforts to combat skyrocketing inflation. The weakness in meme stocks parallels declines between stocks that went public by merging with special-purpose buyout companies and those favored by Cathie Wood’s ARK Innovation ETF.

The basket of meme shares was down 3.7% at 1 pm in New York and the companies that went public by merging with Chamath Palihapitiya-backed SPACs were some of the worst performers of the bunch.

Favorite retail stocks Game Stop Corp. and AMC Entertainment Holdings Inc. each fell more than 8% on Tuesday, while other well-known meme stocks like Express Inc. and Bed Bath & Beyond Inc. also tumbled.

Still, the latest sell-off wasn’t enough to deter individual investors who helped drive meme stocks higher last year. Both GameStop and AMC Entertainment were among the top four most-bought stocks on Fidelity’s platform with buy orders well above sell.

To be fair, investors who got into GameStop and AMC Entertainment before the craze broke out early last year are sitting with strong gains on paper. Both stocks are up more than 350% since the start of 2021, yet are down 73% and 82%, respectively, from their 2021 highs.

Continue reading the story

original note:

Meme Stock Euphoria Goes Bust as Group Slumps to All-Time Low

More stories like this are available on bloomberg.com

©2022 Bloomberg LP