We recently published a list of 13 Best Meme Stocks To Buy Right Now. In this article, we are going to take a look at where GameStop Corp. (NYSE:GME) stands against other best meme stocks to buy right now.
What are Meme Stocks?
Meme stocks are largely driven by social media hype. These stocks gain popularity through memes, modified images, videos, and text shared online, often with positive sentiment by individual investors. Joey Loss, founder of Flow Financial in Jacksonville, Florida, commented in June 2024:
“Meme stocks appeal to our fear of missing out (FOMO) and our desire to get rich quickly. For many investors, it may also appeal to our desire to belong to the tribe–as forums across the internet and social media will create the perception that everyone is participating.”
Meme stocks emerged as a trend in late 2020 and early 2021 when online communities started promoting certain companies’ shares and generating buzz to attract buyers. The rise of commission-free trading platforms and online investing groups during the COVID-19 pandemic played a major role, as many people were at home with extra funds from government aid. Low interest rates may have also encouraged new investors. Meme stock investing was particularly appealing to younger investors who preferred it over traditional investment strategies.
Meme Stock Performance
In 2024, meme stocks remained popular across industries, propelled into fame by social media and the appeal of quick profits. Platforms like Reddit’s WallStreetBets played a notable role in fueling speculation, as investors sought higher returns than traditional assets. Despite skepticism from major financial institutions, the excitement around these stocks persisted. Political figures have also influenced market trends. For example, a media company associated with President Trump saw its stock rise to $70 in early 2024 before dropping to $13 by September, all because of the election frenzy. While the stock later rebounded to $36, the company continued to face challenges, reporting a $19.2 million loss in the third quarter of 2024.
Similarly, a well-known video game retailer that gained attention due to social media-driven hype remained a target for short sellers, even years after its dramatic short squeeze in early 2021. Over the last few years, this company has been a focus for investors betting against its stock. Initially, many short sellers expected the business to face bankruptcy, but as its valuation soared during the meme stock frenzy, they argued its market price no longer reflected its actual financial standing. Before its most significant short squeeze in January 2021, short interest exceeded 140%, meaning more shares were being shorted than were available in the market. While short interest dropped after that period, it remained high, as institutional investors became more cautious about taking large positions against the company.
Our Methodology
For this article, we compiled a list of meme stocks based on the consensus of reputable websites, along with insights from Reddit to assess retail investor interest. Using Insider Monkey’s Q4 2024 hedge fund database, we examined the hedge fund sentiment for each stock and selected 13 most popular ones. The stocks are ranked in ascending order based on the number of hedge fund holders as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A gamer playing a game on one of the specialty retail company’s gaming platforms.
GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 24
GameStop Corp. (NYSE:GME) is a retailer that sells video games and entertainment products both in stores and online across the US, Australia, Canada, and Europe. The company offers new and pre-owned gaming consoles, video games, in-game currency, and digital downloads. GameStop is often categorized as one of the best meme stocks. On March 3, the company and Zip Co., a digital financial services company focused on flexible payment solutions, announced a partnership making Zip the primary provider of pay-in-installments services for GameStop customers both online and in stores across the United States.
In the third quarter of 2024, GameStop Corp. (NYSE:GME) reported a net income of $17.4 million, a big turnaround from the $3.1 million net loss in the same quarter last year. By the end of Q3, the company held $4.616 billion in cash, cash equivalents, and marketable securities. Additionally, GameStop completed its previously announced at-the-market equity offering, selling 20 million shares and generating approximately $400 million in gross proceeds.
According to Insider Monkey’s fourth quarter database, 24 hedge funds were bullish on GameStop Corp. (NYSE:GME), up from 16 funds in the preceding quarter. Ken Griffin’s Citadel Investment Group was among the largest stakeholders of the company, with 3.66 million shares valued at $114.6 million.
Overall, GME ranks 9th on our list of best meme stocks to buy right now. While we acknowledge the potential of GME to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GME but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.