"Meme stocks" are back — have you seen shares of Bed Bath & Beyond? But chasing best-known favorites may not be the best way to score, analysts say. Meme stock ETFs, though, can help.
"Meme stock" ETFs, which own shares of stocks online traders like to trade en masse, are soaring in value. Since the start of July, the $1.6 million-in-assets Roundhill Meme ETF is up nearly 30%. That's more than double the 13% rise of the SPDR S&P 500 ETF Trust during that time.
Analysts see more upside in some meme stocks. Just not the ones most investors first think of. Instead, they're looking for 25% or greater gains from less-known members of the Roundtree Meme ETF like Novavax, DoorDash and MicroStrategy, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
"MEME has been an excellent performer" in recent weeks, said Todd Rosenbluth, head of strategy for VettaFi.
What About BBBY Stock, AMC and GameStop?
Bed Bath & Beyond is surprisingly not in the Roundhill Meme ETF, nor most of the Meme ETFs for that matter. And that is a glaring omission.
Shares of the struggling home goods retailer are up nearly 400% since July. And that tops the 193% rise of Marathon Digital Holdings, which is the top-performing stock in the ETF. AMC Entertainment, too, is a big winner for the ETF. Shares are up 74% since July. And original Meme stock, GameStop, has seen its shares jump nearly 40%.
But that's the issue. Analysts think Bed Bath & Beyond, AMC Entertainment and GameStop are now 82%, 80% and 60% past their 12-month price targets. And don't fool yourself into thinking there's a fundamental story for any of these stocks.
Bed Bath & Beyond is seen losing more than $730 million this fiscal year, analysts say, nearly double what it lost last fiscal year. And it's expected to lose money in 2024, 2025 and 2026, too. It's a similar story at GameStop. The retailer is predicted to lose $99 million this fiscal year and $88 million next fiscal year. AMC's losses are at least shrinking, to just $29 million this year, but the theater chain is expected to be in the red annually until at least 2025.
And that's why analysts seem to think these meme stocks are played out.
Meme Stocks Analysts Like Best
Analysts seem to be trying to get ahead of the next meme stock rally. Their favorite in the Roundhill Meme ETF is Novavax.
Shares of the vaccine company are down 22% since June. But shares are expected to rally more than 200% in 12 months. And it has fundamentals behind it. Novavax is expected to make $4.66 a share in 2022, reversing a loss in 2021. And its profit is seen jumping more than 125% in 2023.
Another favorite is food delivery service DoorDash. Shares are only up 8% since July. But analysts' 12-month price target implies a 68% rally. DoorDash is profitable, too. Earnings are seen dropping 80% this year to 7 cents a share, but rebounding more than 500% in 2023.
Using ETFs For Meme Stocks
If picking the right Meme stock seems impossible, Meme stock ETFs try to simplify the process. In addition to Roundhill Meme, there's SoFi Social 50, VanEck Social Sentiment and AXS FOMO.
They're all up roughly the same amount since June. But know the risks. All the meme stock ETFs are tiny. None have even $100 million in assets. And they're very different and speculative. Roundhill Meme ETF is down more than 40% this year, while VanEck Social is off 30%. VanEck Social doesn't own BBBY stock either, but does have positions in some larger firms like Apple.
"These ETFs are not the same," Rosenbluth says. "But while the reward has been demonstrated, these remain high-risk noncore strategies that own lower quality stocks."
Analysts' Favorite Meme Stocks
Stocks in Roundhill Meme ETF analysts think will rise 25% or more in the next 12 months
| Ticker | Name | Since June | Implied upside |
|---|---|---|---|
| NVAX | Novavax | -22.0% | 213.5% |
| DASH | DoorDash | 7.9 | 68.4 |
| MSTR | MicroStrategy | 96.8 | 54.8 |
| VERU | Veru | 110.8 | 47.8 |
| RIVN | Rivian Automotive | 41.7 | 44.5 |
| LCID | Lucid Group | 6.7 | 42.0 |
| SQ | Block | 32.5 | 41.3 |
| SOFI | SoFi Technologies | 33.6 | 26.7 |
| DKNG | DraftKings | 74.6 | 26.5 |
| MARA | Marathon Digital Holdings | 192.5 | 26.4 |
