Please ensure Javascript is enabled for purposes of website accessibility

Why AMC, GameStop, and Virgin Galactic Were Falling Today

By Rich Duprey – Jul 22, 2021 at 12:28PM

Key Points

  • Inflation and a poor jobs market shouldn't affect these stocks.
  • Meme stock investors typically have their own agenda.
  • Given these facts, significant volatility is to be expected.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Worrisome economic news really has no bearing on their shares.

What happened

Shares of AMC Entertainment (AMC -1.70%), GameStop (GME -1.98%), and Virgin Galactic (SPCE -0.78%) were all falling by mid-single-digit rates or more in morning trading Thursday even as the market indexes themselves were mostly flat as they digested the latest jump in jobless claims.

So what

The shares of these so-called meme stocks typically aren't tethered to business fundamentals or macroeconomic concerns, and today's moves don't seem tied to any specific company news either. Volatility is just how they do.

AMC was down 7%, GameStop was off 4%, and Virgin was declining 6.3%.

Man holding head in front of an arrow pointing down.

Image source: Getty Images.

Now what

Investors who've bought into these stocks shouldn't be wavering in their support. Although I think AMC is the weakest of the three, it does have the cash to survive for quite a while, so there will be plenty of time to panic-sell later on if the movie theater business just can't recover from the pandemic and the launch of so many movie streaming services.

GameStop has a lot to prove with the online-oriented business model that it's transitioning to, but there is a real chance it can do it. It has lots of cash, no debt, and a clearly defined goal of where it wants to go. 

Virgin Galactic, for its part, is also a risky venture in that space tourism is not something that will be happening anytime soon. However, this week's launch of Jeff Bezos' Blue Origin into the under reaches of space, following the same sort of trip Virgin made a week ago, shows it could be a viable opportunity.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Stock Quote
GameStop
GME
$26.17 (-1.98%) $0.53
AMC Entertainment Holdings Stock Quote
AMC Entertainment Holdings
AMC
$7.51 (-1.70%) $0.13
Virgin Galactic Holdings Inc Stock Quote
Virgin Galactic Holdings Inc
SPCE
$5.10 (-0.78%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.