Meme Stock Analysts Are Throwing in the Towel: ‘You Can’t Upgrade and Downgrade Every Day.’

Barrons2021-07-01

Michael Pachter can hardly leave the house without being asked about GameStop. The Wedbush Securities analyst has covered the videogame retailer for nearly two decades. Now, he says everyone from ...

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Comments

ting90
2021-07-01
ting90
Wahh... Howw
MightyPooP
2021-07-01
MightyPooP
I think the only rating they should give is HODL! That isn't hard.
- tegoehh:
  ok
Zanetaghx
2021-07-01
Zanetaghx
Wow

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The Wedbush Securities analyst has covered the videogame retailer for nearly two decades. Now, he says everyone from ...</p>\n\n<a href=\"https://www.barrons.com/articles/meme-stock-analysts-throwing-in-the-towel-51625093768?mod=hp_LATEST\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"AMC","symbol_name":"AMC院线","start_time":0,"source_url":"https://www.barrons.com/articles/meme-stock-analysts-throwing-in-the-towel-51625093768?mod=hp_LATEST","article_id":"1195053623","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1195053623","pubTimestamp":1625128541,"sourceInfo":{"source_id":"lsy1601382232898","name":"Barrons"},"weMediaInfo":null,"summary":"Michael Pachter can hardly leave the house without being asked about GameStop. The Wedbush Securitie","collect":0,"end_time":0,"defaultTopTitle":"barrons.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"AMC":"AMC院线","GME":"游戏驿站",".SPX":"S&P 500 Index","BB":"黑莓","SPCE":"维珍银河","BBBY":"3B家居",".DJI":"道琼斯","WKHS":"Workhorse Group, Inc.",".IXIC":"NASDAQ Composite","MRIN":"Marin Software Inc."},"translate_title":"Meme的股票分析师已经认输：“你不能每天都升级和降级。”","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":0.9,".IXIC":0.9,".SPX":0.9,"AMC":0.9,"BB":0.9,"BBBY":0.9,"GME":0.9,"MRIN":0.9,"SPCE":0.9,"WKHS":0.9},"content_text":"Michael Pachter can hardly leave the house without being asked about GameStop. The Wedbush Securities analyst has covered the videogame retailer for nearly two decades. Now, he says everyone from waiters to the woman giving him a Covid-19 shot wants to talk about GameStop. “It’s the only stock any of them has ever heard of,” he says.\nPachter, 65, who started at Wedbush in 1997, figured the craziness around GameStop (ticker: GME) was winding down in February. With shares tumbling from January highs above $400, the analyst didn’t see the need to tinker with his Hold rating and $16 price target. The stock retreated toward the mid-$40s but then surged again. GameStop shares have been solidly above the $100 mark since Feb. 25, and traded this week over $200. GameStop on Wednesday closed up 1.5% to $214.14. Shares are up 1,036.6% so far this year.\nThe viral squeeze that sent GameStop shares to triple-digit territory befuddled analysts whose price targets averaged out at about $13 at the start of February. Pachter says that short sellers, who sell borrowed shares with the hopes of profiting by buying them back at a lower price, are keeping GameStop stock inflated as they tango with a passionate base of retail investors who gather on social media sites like Reddit. He thought the short sellers would have given up by now, after watching their losses on paper pile up.\nHe was wrong, as were analysts covering stocks such asAMC Entertainment Holdings(AMC),BlackBerry(BB), and Bed Bath & Beyond(BBBY). With these so-called meme stocks on a roller-coaster powered by Reddit comments, short seller interest, and options trading, research analysts are scratching their heads over how to do their job. What’s the point of a “Hold rating” when your target price for the stock is multiples lower than where a stock is trading?\nAnalysts turned out research notes for clients that no matter how well-reasoned, were all but useless as the market prices of meme stocks soared to unheard of levels. “You can’t be upgrading and downgrading your target every day,” Pachter says of GameStop’s volatility. “You can’t move your target that fast.”\nThe disconnect between the stock price and fundamentals led BofA Securities analyst Curtis Nagle to collaborate with a data team at BofA to analyze what online chatter could mean for GameStop stock. They found GameStop stock was trading in line with spikes in chatter on Reddit forums. Many, including Nagle, have since dropped coverage. Only three analysts, including Pachter, still have a rating on the stock.\n“Momentum, social media are now part of the strategy for Wall Street, and they are in a better position than retail to participate, sniff out and start gamma squeezes in the options market,” investor Michael Burry tells Barron’s.\nBurry, 50, whose bearish bet against the housing market ahead of the subprime mortgages collapse was featured in the book and movie “The Big Short,” revealed a long position in GameStop in 2019. Back then, it was a value play, but that was when GameStop traded for around the price of a McDonald’s Happy Meal. Burry exited his GameStop positionin the fourth quarter of 2020 at a profit. Now, he sees parallels to the dot-com bubble and the 2007 crash.\n“Back in 1999, everyone making money in dot-coms thought it would continue,” he toldBarron’sin an email. “In 2007, everyone making money leveraged to the hilt in multiple homes thought it would continue. I don’t know when meme stocks such as this will crash, but we probably do not have to wait too long, as I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails. We’re running out of new money available to jump on the bandwagon.”\nGameStop shares had rallied after Chewy co-founder Ryan Cohen announced he bought a stake and called for the company to cut stores and invest in digital operations. Cohen is now board chairman.\nThat’s something Telsey Advisory Group analyst Joseph Feldman argued GameStop was already doing. Feldman, one of the few remaining analysts with a Buy rating before the surge in late January, thought the market was underestimating the impact of new videogame consoles from Sony Group(SONY) and Microsoft(MSFT).\n“There was a fundamental reason why we felt better about GameStop,” he says. “And we liked that the management team was making changes that focused on efficiency and profitability and shifting toward digital—all those good things. And then the stock went nuts.”\nThe stock surged after Cohen joined the board with two associates. At that point, the amount of shares sold short outnumbered shares available for trading. Sudden price moves can cause short sellers to rush to cover their positions—boosting demand and sending stock prices soaring. Short squeezes have hit a number of meme stocks, which are now targeted by retail investors based on high levels of short selling.\nTelsey’s Feldman downgraded GameStop to Underperform when it rose to $65. Even with his optimistic view of the company’s digital turnaround, he couldn’t justify a target above the low $30s. And while GameStop stock drew plenty of interest from media outlets, Feldman says the opposite was true for institutional investors. He dropped coverage on June 7. “Institutions, who are our main clients, had no interest in it,” he says.\nBaird analyst Colin Sebastian suspended his Neutral rating and $25 price target on Monday—at least until management details its new business strategy. As an analyst, he says he needs to forecast free cash-flow generation and assess the intrinsic value of the shares.\nSebastian wrote that he recognized that GameStop is shifting rapidly from in-store videogame sales to e-commerce, but that he believes “share price volatility is tied more closely to nonfundamental trading, social media influences and other factors that make it difficult, at least in the near term, to make a reasonable stock rating recommendation to institutional investors.”\n\nOut-of-whack prices aren’t the only problem. Andrew Left, an activist short seller, stopped publishing short reports in January after he said GameStop fans harassed him and his family for suggesting the stock was about to fall. For his part, Pachter says he doesn’t pay much attention to the chatter, though he once spotted an online poster who said he should be executed for having a sell rating on GameStop.\n“Nobody is shorting GameStop because I said so,” Pachter says. “They’re shorting GameStop because they believe it’s fundamentally worth $40 or $50, not $200. They don’t need me to tell them that.”\nAlthough GameStop has made major changes to its board of directors and leadership team, and recently raised $1.1 billion with a stock sale, Pachter says that Cohen has yet to share a road map for truly transforming GameStop.\nGameStop has outlined efforts in a proxy statement that it plans to become the go-to e-commerce platform for gamers by investing in technology and expanding its product line, but analysts like Pachter want specifics such as financial targets.\nHe has downgraded the stock to Underperform but brought his target up to $50—more than $150 away from its current price.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":158359730,"gmtCreate":1625131320620,"gmtModify":1703736764961,"author":{"id":"3586738363669355","authorId":"3586738363669355","name":"ting90","avatar":"https://static.tigerbbs.com/0297505cae3ffaf2cfe2b3c790faedae","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3586738363669355","authorIdStr":"3586738363669355"},"htmlText":"Wahh... Howw","listText":"Wahh... Howw","text":"Wahh... Howw","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/158359730","repostId":1195053623,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":158316021,"gmtCreate":1625129075363,"gmtModify":1703736709225,"author":{"id":"3575163551534398","authorId":"3575163551534398","name":"MightyPooP","avatar":"https://static.tigerbbs.com/aec66d00ca2b1f2b75412008d93edd14","vip":1,"hat":"https://static.tigerbbs.com/f84859c65fc2d7681e28f6b8e9b0535a","crmLevel":2,"crmLevelSwitch":1,"idStr":"3575163551534398","authorIdStr":"3575163551534398"},"htmlText":"I think the only rating they should give is HODL! That isn't hard.","listText":"I think the only rating they should give is HODL! That isn't hard.","text":"I think the only rating they should give is HODL! That isn't hard.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/158316021","repostId":1195053623,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":5090308,"gmtCreate":1625129098600,"gmtModify":1663230379936,"authorId":3560163449643723,"author":{"id":3560163449643723,"idStr":"3560163449643723","authorId":3560163449643723,"name":"tegoehh","avatar":"https://static.tigerbbs.com/e5fc8fde533747d617694962e33a5502","vip":1,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":158316021,"type":1,"supId":0,"prevId":0,"content":"ok","text":"ok","html":"ok"}],"langContent":"EN"},{"id":158319969,"gmtCreate":1625128803551,"gmtModify":1703736703997,"author":{"id":"3572924792782965","authorId":"3572924792782965","name":"Zanetaghx","avatar":"https://static.tigerbbs.com/00c8d7266d0f1b04eec7f35954d54324","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3572924792782965","authorIdStr":"3572924792782965"},"htmlText":"Wow","listText":"Wow","text":"Wow","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/158319969","repostId":1195053623,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":40,"commentSize":3,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1195053623"}