Meme madness: Bank of America stops covering GameStop
One Wall Street analyst has had it with the whole meme stock phenomenon.
Curtis Nagle, who covers retailers for Bank of America, is giving up trying to figure out what’s next for GameStop and Bed Bath & Beyond.
Nagle wrote in two reports late Thursday that he’s suspending coverage of GameStop and that he now has no official rating on Bed Bath & Beyond.
Both stocks have surged this year, in part because of support from Reddit’s army of fans on the site’s popular WallStreetBets board. Shares of the two retailers dipped slightly Friday, capping a volatile week.
No real reason for either stock to soar so dramatically
Nagle is not convinced that GameStop’s fortunes have changed so dramatically in recent months as to justify the stock’s big pop in 2021. Shares are up about 60% in the past month and more than 1,200% this year.
He wrote that “non-fundamental factors” have lifted GameStop’s shares recently, namely “the number of conversations on Reddit” related to the stock.
The only real news on GameStop in the past few weeks, Nagle added, were speculative reports about the company looking to cash in on the non-fungible token (NFT) craze. GameStop did report a series of management changes earlier this year, but the company has been more quiet recently.
So, Nagle suggested, GameStop may be merely getting a lift along with other popular meme stocks, such as AMC and BlackBerry.
Bed Bath & Berserk?
Bed Bath & Beyond also resurfaced as a top meme play after originally surging with other Reddit stocks in January. It soared more than 60% Wednesday after the home furnishings retailer unveiled three new private label brands. But Nagle called that news “not material” since it was already expected.
Nagle says that Bed Bath & Beyond’s shares “are no longer trading on fundamentals.” Still, he didn’t drop coverage of the stock entirely, and he believes the company has a solid strategy in place for a longer-term turnaround.
Nagle wrote that the rollout of new brands is a positive and that he was impressed by Bed Bath & Beyond’s plans to revamp its stores and close more underperforming locations.
He also thinks that the rebounding economy will boost sales for its wedding registry business, as well as spark spending by students looking to go back to college.
