Don't let today's rally fool you. Had you plunked $10,000 in GameStop (GME) a year ago and not sold you'd have a huge loss: $2,032 to be exact. Now you can understand the hand-wringing over the formerly heavily shorted stock that's not even in the S&P 500.
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Despite a nearly 33% rise this year to 24.53, shares of GameStop are now down more than 20% from where they were a year ago. A $10,000 investment a year ago would only be worth about $8,000 now. Keep in mind this stock is nowhere near its all-time closing high on Jan. 27, 2021 of 86.66.
GameStop went from one of the top stocks in the S&P 1500 to one of the worst. It's now the 500th worst S&P 1500 stock over the past year. For investors looking for big gains, First Solar (FSLR) has been a much better place to be. Its shares are up more than 160% in a year's time, turning your $10,000 investment into $26,500 now.
Even the most popular index, the S&P 500, is marginally topping GameStop over the past year. And it's less risky. Your $10,000 invested in SPDR S&P 500 Trust (SPY) would be worth $8,857. The Invesco QQQ Trust (QQQ), is better, too, turning your $10,000 into $8,700.
If there's any comfort, it's that GameStop is at least not as bad as some other meme stocks. AMC Entertainment (AMC) did much worse. AMC Entertainment is down 75% the past 12 months, turning $10,000 into $2,496. That wiped away more than $7,500 of a $10,000 investment.
It's a harsh comeuppance for investors.
GameStop: Not In The S&P 500
GameStop's prospects aren't great as any remaining investors are still reckoning with. It sports a middling 21 IBD Composite Rating. That means its chart and fundamentals only underperform 79% of all companies' And the company is seen losing money in fiscal 2024, ended in January 2024.
Specifically, this whole fiscal year, analysts think it will lose more than $143 million or $0.30 a share. GameStop sells video games in its primarily mall-based stores. Gamers are increasingly downloading their games online. Management is trying to aggressively cut costs to maintain profitability.
Successful investors know it's better to use time-tested rules to buy top growth stocks instead.
Analysts are stumped by GameStop, too. Baird suspended its rating and price target year ago. "We expect more store closures and headcount reductions," Baird said.
Betting On GameStop Anyway
It's important to note, though, GameStop along with many meme stocks are crashing lately — and teaching investors a costly lesson. Nearly of 75% of the 25 meme stocks in the new Roundhill Meme ETF (MEME) are now down over the past year (among those trading a year ago).
There are ways to use options to play GameStop, too. And some are trying to spread their bets in struggling retailers using ETFs instead.
Reading The Message From GameStop Stock
The rally in GameStop on March 22, 2023 is a signal on many levels. It's a reminder to investors to know how important it is to buy and sell at the right time.
Just know while was fun counting your newfound riches on GameStop stock and other highly shorted stocks now, you need to have rules to follow when the trade goes the other way.
What $10,000 Invested In Meme Stocks Is Worth Now
Gains and losses on select high-interest and heavily shorted stocks from a year ago
| Company | Ticker | 1-year % ch. | Value of $10,000 now | Sector |
|---|---|---|---|---|
| AMC Entertainment | (AMC) | -75.0% | $2,496 | Communication Services |
| Rivian Automotive | (RIVN) | -71.3% | $2,867 | Consumer Discretionary |
| Snap | (SNAP) | -68.6% | $3,144 | Communication Services |
| Kohl's | (KSS) | -63.0% | $3,696 | Consumer Discretionary |
| Virgin Galactic Holdings | (SPCE) | -57.9% | $4,212 | Industrials |
| NIO | (NIO) | -57.2% | $4,276 | Consumer Discretionary |
| Coinbase Global | (COIN) | -55.3% | $4,465 | Financials |
| Okta | (OKTA) | -49.8% | $5,016 | Information Technology |
| MongoDB | (MDB) | -47.4% | $5,260 | Information Technology |
| ChargePoint Holdings | (CHPT) | -46.3% | $5,374 | Industrials |
| DocuSign | (DOCU) | -42.8% | $5,720 | Information Technology |
| Zoom Video | (ZM) | -41.4% | $5,858 | Information Technology |
| Snowflake | (SNOW) | -38.5% | $6,145 | Information Technology |
| Palantir Technologies | (PLTR) | -36.8% | $6,322 | Information Technology |
| GameStop | (GME) | -20.3% | $7,967 | Consumer Discretionary |
| Moderna | (MRNA) | -20.1% | $7,990 | Health Care |
| DraftKings | (DKNG) | -7.3% | $9,268 | Consumer Discretionary |
| Occidental Petroleum | (OXY) | -0.4% | $9,958 | Energy |
| DICK'S Sporting Goods | (DKS) | 32.3% | $13,230 | Consumer Discretionary |
| World Wrestling Entertainment | (WWE) | 41.1% | $14,107 | Communication Services |
| Hims & Hers Health | (HIMS) | 87.1% | $18,707 | Health Care |
| Reata Pharmaceuticals | (RETA) | 121.9% | $22,186 | Health Care |
| First Solar | (FSLR) | 165.3% | $26,530 | Information Technology |
Sources: IBD, S&P Global Market Intelligence, Roundhill Meme ETF
Follow Matt Krantz on Twitter@mattkrantz
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