GME vs AMC: Can Fallen Meme Stocks Spike Again?

Despite the meme stock mania cooling substantially since its 2021 peak, both GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) maintain loyal followings among traders who continue holding their positions. The phenomenon represents a unique chapter in market history where retail investors coordinated through platforms like Reddit’s WallStreetBets to challenge institutional short sellers. While the explosive short squeezes that defined 2021 haven’t repeated at the same scale, the underlying dynamic remains: betting against these stocks carries uncapped risk, making short positions particularly dangerous even when fundamentals appear weak.

The core appeal for current holders seems to be a combination of nostalgia, community identity, and the lingering possibility of another coordinated buying surge. As the original text notes, ‘if the meme frenzy of 2021 taught us anything, it’s that betting against even a seemingly sure thing is a dangerous proposition that might just lead to uncapped losses.’ This understanding continues to shape trader behavior, with many preferring to hold long positions rather than risk being caught on the wrong side of another potential squeeze.

GameStop stock demonstrated that the meme stock phenomenon hasn’t completely disappeared when it exploded higher ‘seemingly from out of nowhere’ in the spring of 2024. From trough to peak, shares of GME spiked nearly 400% in just weeks, though the rally proved short-lived. The stock subsequently experienced a ‘painful drawdown’ and was down about 50% from its May 2024 peak at the time of writing. This pattern of rapid spikes followed by significant corrections has become characteristic of meme stock behavior.

From a fundamental perspective, GameStop presents challenges for traditional investors. The stock trades at ‘more than 30 times trailing price-to-earnings (P/E),’ making it difficult to justify based on business performance alone. While the company has offered special dividends to reward loyal shareholders, the text suggests that ‘pending a transformative turnaround, I’d reset my expectations with the name as the price action still seems divorced from the fundamentals.’ The 2024 surge, while substantial, was ‘nowhere near as explosive as the great short squeeze of 2021,’ indicating diminishing momentum for these coordinated buying events.

AMC Entertainment represents the other pillar of the meme stock universe, though its business fundamentals have been particularly challenging. Shares now trade for ‘less than $3 per share,’ reflecting the company’s ongoing struggles in the post-pandemic entertainment landscape. While the company has made efforts to improve its situation, including ‘chipping away at its debt while narrowing its losses,’ the path to sustainable profitability remains uncertain.

The text suggests that only a ‘red-hot box office boom or return of Roaring Kitty could spark a swift reversal in the stock.’ Roaring Kitty, the pseudonymous trader credited with igniting the original GameStop frenzy, remains a symbolic figure whose actions could potentially reignite meme stock momentum. AMC’s valuation metrics present a mixed picture – while the stock trades at ‘around 0.26 times price-to-sales (P/S),’ suggesting potential value, the underlying business continues to face structural challenges in the streaming era.

When comparing the two meme stock icons, the analysis presents a nuanced perspective. While acknowledging that ‘both firms offer ample nostalgia,’ the author indicates a slight preference for AMC, stating ‘if forced to pick between GME and AMC, I’d have to go with the movie theatre firm.’ The rationale centers on valuation, with AMC’s price-to-sales ratio of 0.26 compared to GameStop’s P/E ratio exceeding 30, suggesting AMC ‘implies value at these levels while shares are going for around 0.26 times price-to-sales.’

However, both stocks represent high-risk propositions that operate outside traditional investment frameworks. As the text cautions, ‘owning a stock just because you think someone else will scoop it up is a risky move.’ The potential for another coordinated surge exists, particularly ‘in today’s red-hot market, where the appetite for speculation seems to be in a good spot,’ but timing such events remains nearly impossible. For investors focused on fundamentals, there are ‘better alternatives out there’ than either meme stock, given their detachment from underlying business performance.

The enduring lesson from the meme stock era may be that market dynamics have permanently evolved, with social media coordination now a permanent factor in price discovery. While another 2021-scale event seems unlikely, the periodic resurgences in GameStop and AMC demonstrate that these stocks retain their capacity to surprise market participants who underestimate the power of coordinated retail trading.