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4 Meme Stocks to Avoid Like the Plague in October By StockNews

by Mike Robinson

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© Reuters. Four Meme Stocks You Should Avoid Just Like the October Plague

The GameStop (NYSE) short squeeze triggered by social media hype saw meme stocks gain immense popularity. Retail traders were attracted to the dizzying rally, but most meme stocks have weak fundamentals that make them risky. In the immediate term, we believe that fundamentally weak meme stock Beyond Meat (NASDAQ), SmileDirectClub(NASDAQ:), Rocket Lab [RKLB], and Ocugen (“NASDAQ:”) could experience a substantial pullback. These stocks should be avoided by investors for the time being. The hype around them was fueled in part by pandemic-induced panic on social media. They gained immense popularity following the GameStop (GME) short squeeze triggered by retail traders earlier this year, and the craze continues with social media platforms influencing retail investors’ investment decisions. Despite the huge price increases of meme stocks, their poor fundamentals may make them unsustainable.

The U.S. Securities and Exchange Commission charged two people last month for their fraudulent trading scheme that involved meme stocks in order to capitalize on a rise in retail trading due to social media. The situation has created investor concern about meme stocks.

It might be wise not to invest in meme stocks that have low growth prospects or poor financials. We believe Beyond Meat, Inc., SmileDirectClub, Inc., Inc., (SDC), Rocket Lab USA, Inc., Inc., (RKLB) and Ocugen, Inc., (OCGN), are better avoided right now.

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