- Over a good chunk of the past three months, meme stocks like GameStop, AMC, and Bed Bath & Beyond overperformed the broader market.
- However, after the sell-off of Bed Bath & Beyond, due to Ryan Cohen dumping his position, that meme momentum took a pause.
- Putting Bed Bath & Beyond, GameStop, and AMC side by side and looking at key momentum indicators, we see all three stocks are in a similar position – but one stands out among the trio.
(Read more from the Wall Street Memes: BBBY Stock: Why More Short Squeezes Are Still Possible)
Meme Stock Momentum
Meme stocks had excellent returns between July and the first couple of weeks of August. Much of these gains were made in conjunction with broad market recovery; the S&P 500 jumped as much as 17% in just one month. The market rebound indicates that fears of recession and runaway inflation are no longer as intense as they were during the first half of the year.
The Roundhill MEME ETF (MEME) – which refreshes its portfolio every two weeks, following market trends and the latest memes – has underperformed the S&P 500 (^SPY) over the past three months, reporting a 12.7% rise versus 5.9%.
Interestingly, in August, neither of the original, OG meme stocks – GameStop (GME) – Get GameStop Corporation Report or AMC Entertainment (AMC) – Get AMC Entertainment Holdings Inc. Class A Report – were the standouts. Instead, it was Bed Bath & Beyond (BBBY) – Get Bed Bath & Beyond Inc. Report stock that took on massive interest among Reddit-oriented retail investors. The stock saw a triple-digit-gainer short squeeze play out over just a couple of weeks.
The Bed Bath & Beyond meme rally was halted, however, when GameStop Chairman Ryan Cohen, who owned about 10% of the company’s shares, dumped his entire position.
AMC, meanwhile, recently debuted its preferred equity shares, or “APEs,” on the NYSE. The debut was marked by huge trading volume in both AMC shares and APE shares, leading to several trading halts due to volatility.
With that overview in mind, let’s dive into some of the more technical metrics for analyzing the momentum and volatility associated with these meme stocks.
The Money Flow Index
This indicator shows whether a stock is overbought or oversold by looking at the share price and trading volume data over the last fourteen days. Generally, when the money flow index (MFI) is above 80, a stock is considered overbought. When the MFI is below 20, a stock is considered oversold. Levels between 90 and 10 are sometimes also used as thresholds.
AMC currently has a money flow index of 59, while GameStop sits at 48. Both are at similar, median levels. Bed Bath & Beyond stands out from the other two, however, registering an MFI of 76 – this indicates that it is very close to overbought.
A higher MFI shouldn’t come as too much of a surprise to those that have been watching BBBY closely. Bed Bath & Beyond stock is trading at a level far above its fair intrinsic value and at much higher levels than even GameStop and AMC.
The Relative Strength Index
The relative strength index, or RSI, is often used in technical analysis. Unlike the Money Flow Index, the RSI measures go beyond simple “overbought” and “oversold” categorization. Instead, RSI measures the speed and magnitude at which changes in the recent share price of an asset can become overvalued or undervalued under certain conditions.
Generally, it is considered a positive sign when a stock’s RSI reaches 30 or below. Bed Bath & Beyond’s relative strength index is at 49 and GameStop is currently at 47. AMC’s is at exactly 30. This indicates that, at the moment, there will be a greater tendency for AMC’s share price to rise, compared to GameStop and Bed Bath’s share prices.
Bed Bath and Gamestop are both close to the 50-point threshold. Above this level, stocks are experiencing more buying than selling, which can be an indicator of overvaluation. Conversely, stocks below the 50 mark are seeing greater selling pressure, which could signal undervaluation.
Meme Stocks Popularity
Meme stock prices are highly influenced by their popularity among retail investors on social media platforms such as Reddit. In this regard, Bed Bath & Beyond has been the winner in recent weeks.
According to data from ApeWisdom, at the time of writing, Bed Bath & Beyond stock is by far the most talked about ticker on all the major stock and bond discussion forums on Reddit.
When looking at Reddit’s most popular stocks and options forum, r/wallstreetbets, Bed Bath & Beyond has been, by far, the most commented on the ticker for the past week. GameStop and AMC come in at the number two and three spots, though they are well behind BBBY.
Although Bed Bath & Beyond stock is more popular than GameStop and AMC, there’s also much more obvious bearish retail sentiment surrounding BBBY.
When considering momentum indicators – excluding Reddit popularity – AMC stock looks slightly more attractive than its meme counterparts. Much of that may be thanks to AMC Preferred Shares (APEs) recently debuting on the NYSE.
It’s also important to remember that this meme stock revival has coincided with an upswing across the broader markets. All three stocks have a 1-year period beta above 2 – indicating they move with the greater markets but are wilder in their price swings.
Thus, during periods when there are no company-specific catalysts, broad market bullishness or bearishness could remain key to driving meme stock sentiment.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)