If you look up dead cat bounce in the dictionary, you’ll find today’s meme stock rally at the top of the page. Over the past few years, legions of “investors” swarmed forums like Reddit (NYSE:RDDT) to promulgate bizarre theories, take questionable action like transferring shares to notoriously difficult-to-work-with transfer company Computershare, and cheerlead one another that the great short squeeze was right around the corner amongst meme stocks to sell.
To be clear, I think that the original GameStop (NYSE:GME) saga is one worth studying; I personally made a few bucks off the trade back in 2021 (regrettably, selling at around $10 per share!). I think that Keith Gill, who kickstarted the “movement,” is smart, funny, and made a series of shrewd and strategic financial analyses that truly identified GameStop as a deep value play (I’m also enjoying watching him toy with the algorithms in real time today).
But if you’re holding out for a repeat meme stock saga — don’t. These meme stocks to sell could sink your portfolio faster than you can say stock dilution, and, practically speaking, there are much more attractive and appropriately priced options on the market today.
GameStop (GME)
GameStop (NYSE:GME) management is smart. Running with existing momentum, the company is raking cash into its coffers via another series of dilutive stock offerings that benefit its cash reserves — at the expense of existing shareholders. All that theorizing that securing shares with Computershare is the best way to prevent short sellers from borrowing your stock? The logic goes out the window when management floods the zone with 75 million new shares. That stock offering, of course, comes on the heels of a prior May issuance of 45 million shares worth $933.4 million.
Again, this is a smart move for management, even if the meme stock’s prospects aren’t strong. The company said that “[They] intend to use the net proceeds of this offering, if any, for general corporate purposes, which may include acquisitions and investments [but that there] are no current plans, commitments or arrangements to make any acquisitions or investments.”
Running some quick numbers, the 45 million new shares alone will generate more than $90 million over the next two years if invested in Treasury Notes at the current auction rate. That, of course, will bolster the company’s struggling financial position as it marks yet another losing quarter, even if its net loss improved to $32.3 million compared to a $50.5 million loss this time last year.
Ultimately, the king of meme stocks has no clothes — making it the number one meme stock to sell if you take an objective, practical approach to the topic.
AMC Entertainment (AMC)
After GameStop, AMC Entertainment (NYSE:AMC) is the second top meme stock. However, unlike GameStop, which at least improved its per-share losses in recent months, AMC shows little promise of a sustainable recovery.
Like GameStop, AMC is using higher meme stock pricing to grab investor cash in another series of dilutive share offerings. They’re also exploring new sales opportunities amid suppressed moviegoer turnout. Their latest strategy?
Rather than concentrating on drawing moviegoers back to theaters or restructuring its finances to adapt to the changing market, AMC’s management is spending valuable time and money on candy R&D, saying that “the launch of AMC Cinema Sweets follows more than a year of study and close collaboration with top confectioners to create gourmet chocolate candies”.
While it’s well-known that cinemas make a significant portion of their revenue from concessions, the question remains: Is investing significant resources in developing a line of in-house candy the best strategy? With the company’s earnings report marking yet another $100 million net loss (with basically zero improvement year-over-year), it seems like their efforts could be better spent elsewhere.
Trump Media & Technology Group (DJT)
Trump Media & Technology Group’s (NASDAQ:DJT) Truth Social platform missed its brief opportunity to capitalize on reactionary impulses and rejection of legacy social media companies. Unfortunately for shareholders, this window has since closed, making this our final meme stock to sell stat.
Truth Social emerged during a period marked by increasing de-platforming, censorship, and algorithmic biases—once speculative issues but have since been substantiated by leaks and investigative journalism. At that time, there was genuine potential for establishing a major new social media network independent of the mainstream giants. Other platforms were generally too niche or lacked the momentum needed for significant impact, and few public figures could draw attention like Trump.
Yet, extended legal battles and questionable management by CEO Devin Nunes quashed any chances of Truth Social establishing itself as a formidable player. Meanwhile, the transformation and realignment of Elon Musk’s X effectively cater to the very principles Truth Social aimed to uphold, and this approach is proving effective. Global user engagement on X is on the rise, and its advertising revenues are steadying. Conversely, Truth Social is experiencing a steep decline in user engagement and nearly non-existent ad revenue, making this meme stock one worth selling sooner rather than later.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.