Almost two years ago, during the first winter of the COVID pandemic, Roman Tirone was introduced to the world of meme shares.
“I think I had a couple of friends reach out to me and I took a look,” the New York City-based investor told MarketWatch. “It was a strong community that was pretty confident that they were going to send the stock up.”
These were heady days indeed for meme stock darling AMC Entertainment Holdings Inc. AMC,
as investors drove the stock to a high of $72.62 on June 2, 2021. AMC closed at $18.21 on Wednesday, well below the 52-week high of $52.79 reached on September 13, 2021. Fellow meme stock star Game Stop Corp. GM,
climbed to a 52-week high of $63.92 on November 3, 2021, but ended Wednesday’s session at $37.93.
Caught up in the momentum of the meme-stock community, Tirone made significant investments in AMC and Game Stop. “At first it was going really well, and then things started to deteriorate,” he told MarketWatch.
Look now: AMC may have been a meme darling, but weakness in some key areas has the company on shaky ground
However, he was able to apply what he learned elsewhere. “I ended up taking what I learned about digital communities, online investing and new speculative assets, and I used it to invest in blockchain and NFT,” he said.
An NFT, or non-fungible token, is a unique digital asset that leverages blockchain technology to verify ownership or exchange tokens. An increasing number of companies are engaging in NFTs. eBay Inc. EBAY,
for example, recently launched its first collection of NFTs, featuring animations of athletes from Sports Illustrated covers.
Blockchain, which has grown in popularity in recent years, is a decentralized digital ledger of transactions. The technology is used to underpin cryptocurrencies such as bitcoin.
“I learned a lot about how to read the momentum, understand how and when a community is a signal, both good and bad, and how there are typically levels in a community… whether someone is a lifelong investor or someone just passing, Tirone added. “You can’t get carried away with the inner glow of other people’s ideas when it comes to investing.”
Applying what he saw in the meme stock world, Tirone now describes himself as an NFT collector. In particular, Tirone is focused on NFT collectibles, art, and Play-2-Earn games, where players are rewarded with NFTs or cryptocurrency.
The market for NFTs, or non-fungible tokens, has boomed in recent years, but has cooled somewhat this year amid the crypto crash.
Look now: ‘Squeezable’ AMC, GameStop shares break out to multi-month highs
Nonetheless, Tirone says his transition into blockchain and NFT investing has been “life-changing.”
Despite his pivot to a new investment strategy, the investor maintains a small position in AMC. “I still have some AMC — it’s a small fraction of what I originally owned,” he told MarketWatch. “It’s more of a symbol for the cause at this point.”
The reason, Tirone explained, is about the little guy. “At a high level, it’s an underdog story where people who usually lose have a chance to win,” he said.
George Pearkes, an analyst at Bespoke Investment Group, told MarketWatch that the massive upside volatility in meme stocks is clearly playing out. However, he characterized meme stocks as “sticky in the outflow”, with some investors unwilling to let go of the stock. “The inflows come in very large and very fast, then the outflows filter out,” Pearkes said.
Look now: Here’s the little-known reason Cathie Wood’s ARK Innovation ETF is having such a bad year
To illustrate his point, Pearkes pointed to the “tough race” that ARK Innovation ETF ARKK,
has held since the peak in 2021, noting that some investors are still committed to holding the ETF. “It’s pretty classic investor behavior, and I think it applies to the meme stocks as well,” he said.
The ARK Innovation ETF is down 48.7% so far this year. AMC stock is down 33% in 2022 and Game Stop is up 2.2%. The S&P 500 index SPX,
is down 12.8% in the same period.
AMC reports its results for the second quarter after the market closed on Thursday.
