Meme stocks fall as fundamentals come back into play – The Average Joe


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    Meme stocks fall as fundamentals come back into play


    August 22, 2022

    Investor loyalty is fickle with meme stocks — which are collapsing after rallying hard in recent weeks.

    Bed Bath & Beyond (NASDAQ:BBBY) has lost the majority of its 400% gain in recent weeks — after once pedestaled Ryan Cohen sold his entire stake.

    • Last Friday, Bed Bath & Beyond reportedly hired prominent restructuring and bankruptcy firm Kirkland & Ellis.
    • Suppliers to BBBY also reportedly stopped sending shipments to the home-goods retailer after falling behind on payments.

    AMC (NYSE:AMC) cratered 42% yesterday after its newly issued $APE shares began trading — which also fell 14%.

    • Early August, AMC announced a stock dividend — the distribution of new preferred shares with the ticker $APE to existing AMC shareholders.
    • This is similar to a cash dividend, except instead of cash being distributed to shareholders, stock is issued.

    Wow. Free shares? Not exactly. Yesterday, AMC’s CEO tweeted a reminder that “the value now of your AMC holdings consists of the prices of your AMC shares and your new APE units COMBINED.” News of a potential bankruptcy by the second largest theater chain Cineworld also brought down $AMC.

    It’s a tough time in the theater biz. Despite sales recovering since the chain reopened in April 2021 — theater traffic has struggled to return to its pre-COVID levels, with Cineworld’s large debt balances becoming too much to handle.

    Hype sent meme stocks up, and now fundamentals are bringing them down to earth.

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