As retail traders flock to meme stocks amid a broader cryptocurrency sell-off, the prices of these stocks have been skyrocketing. However, with U.S. regulators monitoring for signs of manipulation and violations of market rules, it is less likely that these stocks will witness a GameStop-like short squeeze. Given that meme stock rallies are simply the result of speculation by amateur investors, the momentum in these stocks is expected to fizzle out soon. So, that is in-part why Wall Street analysts are extremely bearish on popular meme stocks AMC Entertainment (NYSE:AMC), GameStop (GME), and Blackberry (TSX:BB), and expect them to tumble 40% or more in the near term. Read on to lean more.It appears that day traders have regained their zest for meme stocks as cryptocurrency continues to wobble, with prices of Bitcoin (BTC) and Ethereum (ETH)—two of the most popular cryptocurrencies—plunging since May. While meme stocks are in the spotlight again, as evidenced by AMC Entertainment Holdings, Inc.’s (AMC) 95% rally on June 2, Wall Street analysts believe substantial declines in these stocks are looming.
The rally is doubtless being fueled by a bout of speculative trading by retail investors who are active on subreddit forum r/wallstreetbets. However, the U.S Securities and Exchange Commission has been observing markets and looking for any more signs of misconduct and manipulation as the hype continues to drive a big rally in meme stocks. Amid the Reddit-fueled volatility, we think it is important that investors avoid FOMO (fear of Missing out) and stay focused on companies that can produce long-term values.
Wall Street analysts believe AMC Entertainment Holding (AMC), GameStop Corp . (NYSE:GME) and BlackBerry Limited (NYSE:BB) are highly speculative investment bets given that the meme stock rally is expected to end just as quickly as it began. Their poor long-term growth prospects and weak fundamentals could lead to the stocks suffer a pullback at any time.