Shares of some fundamentally weak stocks have hit record price highs over the past few months due solely to social-media hype surrounding them. However, given rising concerns over the Delta variant’s impact on economic recovery, many analysts expect the stock market to remain volatile in the near term. Amid this environment, Wall Street analysts expect popular Reddit stocks GameStop (NYSE:) and AMC Entertainment (NYSE:) to plunge in price in the coming months. Read on.The Dow Jones and S&P 500 indexes tumbled on Tuesday, as concerns related to the economy’s faltering recovery overshadowed optimism over the Federal Reserve’s possible continuation of its accommodating stance following disappointing U.S. payroll data.
As the economy exhibits signs of slowing growth, fundamentally weak stocks that surged in price over the past few months on social-media hype surrounding them could suffer a significant pullback in the near term.
Therefore, we think the shares of struggling companies GameStop Corporation (GME) and AMC Entertainment Holdings (AMC), which are currently trading at lofty valuations because of short squeezes triggered by Reddit and other social media forums, are susceptible to a massive price decline in the near term. Indeed, Wall Street analysts expect these stocks to plunge more than 50% in price in the coming months.
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