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GameStop vs. AMC Stock: Which Meme Stock Should You Invest In?

"Blue chip" meme stocks GME and AMC have had a rough year so far. However, there's a possibility both stocks could enjoy another short squeeze soon. Which should you invest in?

GameStop   (GME) - Get GameStop Corporation Report and AMC Entertainment  (AMC) - Get AMC Entertainment Holdings Inc. Class A Report are undeniably the top meme stocks on the stock market. But so far this year, both stocks have been on a losing streak. GME is down 40% year to date, while AMC has lost 56%.

Investors who believe in the profit potential of these stocks would tell you that these declines mean it's a great time to get into GME and AMC. Based on performance, engagement, and business fundamentals, which one would be a better investment? Draw your best conclusions from the information below.

Figure 1: GameStop vs. AMC Stock: Which Meme Stock Should You Invest In?

Figure 1: GameStop vs. AMC Stock: Which Meme Stock Should You Invest In?

(Read more from Wall Street Memes: GameStop Stock: Redditors Are Decoding Ryan Cohen’s Tweets)

The Best for Performance

GameStop is the mother of all meme stocks. In fact, it was the stock that kicked off the whole meme frenzy.

For most of 2020, GameStop was trading for less than $5 per share, and it looked like the COVID pandemic would destroy the retailer for good. But then Ryan Cohen, the founder of Chewy  (CHWY) - Get Chewy Inc. Class A Report bought nearly 10% of GME's outstanding shares and joined the board.

Spurred on by upvotes in Reddit's investing forums, GME soared to a high of $325 on January 29, 2021 — handing some investors gains in the thousands of percent.

Ever since the first wave of meme frenzy, GameStop shares have been highly volatile. The stock closed out 2021 trading above $150 per share, making its yearly performance a gain of 687%.

But as we mentioned above, year to date, 2022 has seen GME losing roughly 40%.

Like GameStop, AMC was another meme star of 2021. The company had been the target of a lot of short activity due to the weakness of its movie theater business in the face of the COVID pandemic.

During the meme frenzy of January 2021, AMC's stock went from a meager $2 to $13 per share in less than a month. However, it wasn't until June 2021 that AMC stock saw its biggest short squeeze, when it reached $59 per share — a 2,450,00% increase from January 2021. AMC shares closed 2021 up more than 1,180,00%.

The current year has been a difficult one for AMC. Although the stock saw a rally of over 117% in March after the announcement that the company had acquired part of gold and silver miner Hycroft Mining  (HYMC) - Get Hycroft Mining Holding Corporation Report, year to date, losses in 2022 have accumulated to over 56%.

Since the month before the meme frenzy kicked off in January 2021, GameStop's total returns have been 493%. AMC has returned 233%.

Figure 2: GME and AMC performance since December 2020.

Figure 2: GME and AMC performance since December 2020.

The Best for Engagement

According to a report released in the middle of last year by the U.S. Securities and Exchange Commission (SEC), the January 2021 GME meme frenzy was due to a few reasons: (1) frequent Reddit mentions, (2) significant coverage in the mainstream media, (3) large volume changes, and — sure enough — (4) elevated short interest.

GameStop and AMC often number among the most discussed tickers on Reddit. Of the subreddit forums dedicated to supporting both stocks, GameStop's r/Superstonk has an incredible 782,000 highly active members. And the r/GME subreddit has 358,000 members.

AMC receives less attention but is still a hot Reddit stock. The r/amcstock subreddit has 466,000 regularly active members, and r/AMCSTOCKS has 56,000 members.

However, both GME and AMC have relied on comments posted on r/wallstreetbets during their massive short squeezes. The famed subreddit has more than 12 million members.

The Best for Fundamentals

Looking at the fundamentals of their businesses, both companies have taken different positions on how to approach their incredibly strong share price appreciation.

Even with its fundamentals far from being ideal — which was a main reason for short sellers to target the stock in the first place — major shareholder and company chair Ryan Cohen recently bought even more shares although GME's valuation is out of sync with its fundamentals.

GameStop's management has not been crystal-clear regarding initiatives to modernize the business and to make the best use of the increase in its share price. Today, the main initiative that the company touted is its plan to set up an NFT marketplace and other projects involving blockchain and Web 3.0.

AMC has been a different story. Heavily impacted by the pandemic, the company was on the verge of bankruptcy and did not miss the opportunity to raise over $500 million in cash from issuing equity.

CEO Adam Aron — who ended up selling some of his personal shares as well — credits shareholders with being key in keeping AMC on its feet and recovering closer to pre-pandemic levels.

So far, AMC has done much more in regard to its business fundamentals thanks to its meme status. The company has paid off and restructured debts, implemented improvements in the infrastructure of its theaters, and accelerated plans to acquire more. It's also seeking new investment alternatives through retail sales of its branded popcorn, NFT projects, and other investments not related to its core business, such as the acquisition of part of the Hycroft Mining gold and silver mining business.

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(Corrections: the article has been modified to accurately reflect information regarding GameStop's ATM Offering)

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)