3 Meme Stocks I Wouldn’t Touch With a 10-Foot Pole

Muslim Farooque

December 12, 2023 4 min read

The investment landscape has been abuzz with the trend of meme stocks, a phenomenon ushered in by the remarkable and dramatic rise in GameStop’s (NYSE:GME) stock in 2021. Driven by social media enthusiasm, these stocks experience rapid volatility that reinforces the importance of knowing which meme stocks to sell. With the allure of quick gains, these stocks carry major risks that can potentially be incredibly detrimental to one’s portfolio.

Furthermore, the excitement fueling these stocks typically stems from hype rather than solid financials. Investors, drawn in by the fervent discussions in online forums, may find these stocks tempting. Yet, it’s critical to realize that online enthusiasm doesn’t guarantee long-term stability.

Consequently, a careful approach is imperative in navigating meme stocks. Their transient success often masks the risk of sharp declines. Investors should tread carefully, distinguishing between momentary hype and sustainable investments. This careful assessment is key to safeguarding one’s financial well-being in the unpredictable meme stock market.

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Tupperware (TUP)

Pile of several and many Tupperware plastic products, Tupperware Corporation, (TUP) an American multinational company produces plastic food storage containers and bottles

Source: Tamer Adel Soliman / Shutterstock.com

Once heralded as a star of the meme stock era, Tupperware (NYSE:TUP) now serves as a cautionary tale in the stock market. Renowned for its household and kitchen products, the company has seen its luster fade, with recent troubles including a failure to file its SEC Form 10Q quarterly report. This issue, stemming from employee attrition in crucial accounting roles, suggests deeper operational challenges. The departure of PricewaterhouseCoopers (PwC) as the company’s public accounting firm adds to the uncertainty, especially since PwC declined to audit the fiscal year 2023 despite no reported disputes with Tupperware.

Moreover, the company’s stock has suffered a striking 52% decline over the past year. PwC’s previous audits, while not adverse, indicated serious concerns over Tupperware’s long-term viability. Additionally, the confluence of diminished resources and a disruption in the continuity of expertise raises questions over its future. Consequently, Tupperware seems less like a promising investment and more like an entity struggling to regain its past stature. As far as meme stocks to avoid go, investors should be making sure to steer clear of TUP.

Carvana (CVNA)

Source: Ken Wolter / Shutterstock.com

Carvana (NYSE:CVNA) initially showed promise by combining a robust digital presence with distinctive car vending machines. Though investors initially believed in what seemed like a profitable strategy, the company’s financial performance that followed had them regretting their decision. Its most recent earnings report revealed significant losses, with over $5.9 billion in debt and only $544 million in cash and equivalents. This financial strain, compounded by a cooling auto market, signals potential future challenges.

Moreover, Carvana’s reliance on technology to drive up prices now appears as a risky gamble as it lacks a clear path to long-term profitability. The company’s strategy, aimed at short-term gains, sharply contrasts with the optimistic projections from investors. Currently, Carvana’s ongoing financial struggles and the lack of a concrete plan for recovery render it an unattractive choice for investors in the automotive sphere and one of the meme stocks to avoid.

GameStop (GME)

Source: 1take1shot / Shutterstock.com

GameStop was at the forefront of the once-vibrant meme stock phenomenon of 2021. But the excitement has dwindled and the retailer is now grappling with imminent obsolescence. GameStop’s traditional storefront model is losing ground to digital titans like Steam and Microsoft (NASDAQ:MSFT), a transition reflected in its uninspiring balance sheet and dimming future prospects.

As the holiday season approaches, the spotlight is on CEO Ryan Cohen’s strategy for a dramatic turnaround. Despite this, GameStop is poised to continue its recent trend of lackluster sales and store closures, compounded by the challenges of a volatile gaming industry and a faltering economy. These elements collectively paint a bleak picture for GME stock in 2024, suggesting it might be time for investors to reassess its role in their portfolios.

Illustrating this decline, GameStop’s stock has tumbled 33% year-over-year (YOY) and plummeted over 80% since January 2021. This steep fall starkly contrasts with the S&P 500’s ascent, highlighting the widening chasm between GameStop’s market performance and overall market growth. This lackluster performance indicates GME is another one of the meme stocks to sell.

On the date of publication, Muslim Farooque did not hold (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 InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.