Recent weeks have seen investors switching from meme stock to meme stock as online investment gurus on r/wallstreetbets led the way. Now, experts like Michael Burry of "The Big Short" fame are warning that the halcyon days of meme stock and crypto investors will soon come to an end. Until then, investment in meme stocks continues to dominate discussion amongst online traders.
In the past week, Torchlight Energy
Each time that the online gurus switch attention to new stocks, the short sellers get nervous. Last week, short-sellers lost $71 million, with another $138 million being wiped out when Torchlight hit its peak price on Monday.
Like GameStop
However, while both GameStop and AMC have kept their dominant positions as the two most active meme stocks names on Reddit, other meme stocks have seen pullbacks in recent weeks. Wendy's
These two meme giants are now betting on being able to raise enough money through stock sales to revive their businesses. AMC has plans to sell another 25 million shares next year after selling 12 million so far this month in order to raise funds for "value-creating" investments. GameStop, meanwhile, has plans to sell up to 5 million shares in an "at-the-market" sale in order to raise funds for "growth initiatives."
So far, investment experts seem doubtful regarding GameStop and AMC's ability to turn things around while agreeing that meme-stock investment will likely be essential to the process.
"Right now AMC is a $30 billion company with very little hope that it can survive unless it monetizes the meme support, which is exactly what it should do," Jim Cramer, host of "Mad Money", said in his Real Money Column. " GameStop needs a brilliant plan and while [Chairman of GameStop, Ryan] Cohen has brought in brilliant people, the issue is what is the company going to be? It can't be what it is. No industry insider thinks that is possible."
The doubt surrounding the long-term viability of meme-stock and crypto investment involves more than just the companies' ability to turn things around. Instead, investment experts like Burry, who became famous for predicting the 2008 housing crash, say that the high prices of meme-stocks are unsustainable.
"All hype/speculation is doing is drawing in retail before the mother of all crashes," Burry tweeted. "When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries."
While he initially helped enable the January GameStop short squeeze, the investment veteran has since issued warnings about meme-heavy investments including GameStop, dogecoin, bitcoin, and Tesla