One year on, meme stocks are stagnating

Retail investment increased to unprecedented levels in 2021 due to the widespread launch of commission-free trading platforms similar to Robinhood HOOD. The activity was responsible for 21.3% of the total equity volume that year.

The growth of stocks like AMC Entertainment AMC and Gamestop GME helped boost the trend for so-called meme stock investing. The launch of the Roundhill was a result of many people caught on, the firstETF to track the performance of meme stocks.

One year later, the meme sector is stagnating.

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Roundhill defines meme stocks as equity securities of companies with high social media activity and high short interest. Growth in the number of retail investors is a thesis behind the formation of the ETF, according to the investor deck.

Thursday, December 8 marks the one-year anniversary of Roundhill's launch.

Other indexes represent larger sections of the market, including the S&P 500, the Dow Jones and the Nasdaq Composite, and appear to be entering a new recovery phase. The meme market has not had large movements since May.

MEME shares were sold at $5.91 on Tuesday, went out for $6.10 in mid-May and only peaked around $8.30 around mid-August. A big drop from a price of $16.4 a year ago.

Express EXPR, another meme stock, surged on Thursday morning after releasing third-quarter financial results and a strategic partnership with WHP Global.

After the company released its third quarter financial results, shares in flagship meme stock Gamestop surged on Thursday. The company reported a net loss of 31 cents per share, which was worse than the consensus estimate of 28 cents.

The gaming retailer is down 36% this year and over 76% from the peak of its January 2021 rally that put meme stocks on the map.

According to CNN's Paul R. La Monica, extra money from stimulus checks together with extra free time and boredom from COVID 19 lockdowns led to the success of meme stocks.

With unemployment at 3.7% and uncertainty over rising interest rates and inflation, investors are leaning towards a safer allocation of capital and away from volatile stocks lacking strong fundamentals.

Benzinga s take: The future of meme stocks is uncertain, but today s landscape is more welcoming to other types of investment.

From the huge wave of new investors that the pandemic brought onto the market, those who stuck around have had at least two years of investing experience.

The adoption of criptocurrency plays a role. This new generation retail investor has witnessed a full bull market, what appears to be a complete bear market, the greatest bubble in the history of cryptocurrencies, and several other sector-specific bubbles, including meme stocks and a recent tech correction.

Retail investors are becoming more mature and educated. The market for speculative investment is beginning to show signs of that.