Beware of These 3 Overpriced Meme Stocks (Not Named AMC or GME)

Stock Markets35 minutes ago (Jun 10, 2021 10:31AM ET)

(C) Reuters. Beware of These 3 Overpriced Meme Stocks (Not Named AMC or GME)

A subreddit WallStreetBets-triggered short squeeze helped fuel a massive rally in GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) earlier this year. And with the return of the meme stock frenzy, AMC has climbed to fresh highs this month. But this time BlackBerry (NYSE:BB), Sundial Growers (NASDAQ:SNDL), and Workhorse Group (WKHS) are hogging the spotlight and their share prices are skyrocketing. But because these three stocks are trading at lofty valuations in the absence of sound financials, we think they are best avoided now.Retail investors’ rekindled interest in meme stocks continues to fuel AMC Entertainment Holdings, Inc’s. (AMC) wild ride. The stock hit a $72.62 fresh high earlier this month and has rallied roughly 420% over the past month. Its blistering meme stock rally began with January’s more than 1,600% gain in GameStop Corporation (GME). In fact, the chief strategist at Interactive Brokers (NASDAQ:IBKR) characterized AMC’s massive gains, which resemble those of GME, as “meme stock 2.0.”

According to HypeEquity data, retail investors who are active on subreddit r/wallstreetbets have been boosting the hype this week with words like “short” and “squeeze.” However, getting caught up in such frenzies could potentially lead to significant losses, given the extreme volatility that meme stocks experience.

Amid the renewed interest in buying meme stocks, BlackBerry Limited (BB), Sundial Growers Inc . (SNDL), and Workhorse Group Inc. (WKHS) have hogged the spotlight. Although the gains in these stocks are irresistible, we believe these companies do not possess sufficient fundamental strength and cash positions to sustain their sky-high valuations. So, we think these meme stocks are best avoided now.

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Beware of These 3 Overpriced Meme Stocks (Not Named AMC or GME)

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