A movie release that explained the GameStop (GME) meme trade in 2020-21 signified a peak. To this day, meme trades are still deflating.
AMC Entertainment (AMC) completed an APE preferred share conversion that diluted shareholders. AMC stock fell from a seemingly stable $40-$50 stock price to just $8.36 last week.
The fall of GME and AMC stock will spread to other firms. Chewy (CHWY), which needs cash, disclosed in a Securities and Exchange filing on Sept. 15, 2023, that it may sell stock, warrants, units, and securities purchase contracts. Eventually, CHWY stock will fall near zero. At best, the zombie stock would give traders a chance to speculate. Bed Bath and Beyond and Lordstown are examples of stocks that enjoyed spectacular percentage gains before the stock exchange delisted them.
Investors should watch out for companies that thrived during the pandemic but burned too much money. Retail firms at risk of falling to zero include Farfetch (FTCH), Beyond Meat (BYND), and Peloton (PTON).
Conversely, investors may consider firms that are struggling with significant drops that will survive. That includes Advance Auto Parts (AAP), and Dollar General (DG).
