Reeling Meme Stocks: A Fading Fad in 2024 Reeling Meme Stocks: A Fading Fad in 2024

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By Ronald Tech

Meme stocks, once the darlings of retail investors, are now a shadow of their former selves. Many have lost the lion’s share of their peak values, struggling both fundamentally and in stock price performance. Still, a few continue to sport high valuations, notably in the crypto space. This includes SoFi Technologies (NASDAQ:SOFI) and Palantir (NYSE:PLTR). However, caution is paramount for investors as several meme stocks remain overvalued and likely to face a significant downturn. Here are three meme stocks investors should consider selling in the current climate.

The Case Against AMC (AMC)

Predictably, AMC (NYSE:AMC) stock has tumbled sharply in recent weeks and months, losing 43% of its value in the past three months and a staggering 90% over the last 12 months. Despite the initial hype around movies featuring popular singers Taylor Swift and Beyonce, the company struggles to reignite consumer enthusiasm for movie theaters amidst the widespread availability of films on-demand. The numbers tell a grim story; by 2023, the number of movie tickets sold in America remained 31% below 2019 levels. Furthermore, AMC still carries a net debt of $3.7 billion which may result in the constant sale of more shares, further undermining the stock’s value in the future.

Virgin Galactic (SPCE): A Space of Financial Turbulence

Last year, some meme stock investors became upbeat about Virgin Galactic (SPCE) as it commenced commercial flights and completed its initial expedition with tourists aboard. However, the company’s third-quarter results revealed meager revenue of just $1.7 million. It is also expected to burn between $125 million to $135 million in Q4, with only about $500 million of net cash left as of the end of Q3. With SPCE on course to exhaust funds soon, and the low revenue generation, it might face difficulties in borrowing money or attracting investors, possibly leading to bankruptcy in late 2024 or early 2025.

Mullen (MULN) – A Firm on Shaky Grounds

Mullen Automotive Facing Tough Times: A Deep Dive into the Troubles of MULN

Mullen Automotive Facing Tough Times: A Deep Dive into the Troubles of MULN

Financial Woes Plague Mullen Automotive

Electric-vehicle maker Mullen (NASDAQ:MULN) incurred a staggering $1 billion in losses last year, with its revenue from electric vehicles amounting to a paltry $366,000. Such dismal performance undoubtedly raises concerns about the future prospects of the EV manufacturer.

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Underwhelming Orders and Cash Reserves

Notably, the orders reported by Mullen in its Q3 earnings press release fail to inspire confidence. The company referenced orders totaling $17.3 million from a single U.S. auto-dealer chain, $6 million worth of electric trucks from unspecified customers, and a 30-unit purchase order from an Irish auto-dealer chain, the monetary value of which remains undisclosed.

In addition, MULN had a meager $81.5 million of cash on its books at the close of Q3. These figures, coupled with the company’s weak revenue performance, raise serious concerns.

Valuation and Competitive Landscape

Despite the company’s feeble revenue and order figures, substantial 2023 losses, and limited cash reserves, MULN’s stock is trading at an exorbitant trailing price-sales ratio of 20.

Moreover, the intensifying competition in the EV market adds to the challenges faced by Mullen Automotive. With the market becoming increasingly crowded, MULN may find it difficult to carve out a sustainable niche for itself.

Conclusion: MULN Among the Top Meme Stocks to Sell

Given the disturbing financial metrics, combined with the cutthroat nature of the EV industry, Mullen Automotive emerges as an unfavorable investment option. Investors may be wise to consider divesting their positions in MULN, as its growth prospects appear severely constrained.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.