My winning streak of singling out stocks that I think will drop in the week ahead is still going strong. My three stocks to avoid last week were on the move -- as Cintas, Beyond Meat, and GameStop were down 1%, 2%, and 2%, respectively -- averaging out to a 1.7% decline.
The S&P 500 rose 2.3% for the week, so I was the relative winner with my bearish calls for the tenth week in a row. This week, I see AMC Entertainment (AMC 8.23%), GameStop (GME -3.94%) and Robinhood Markets (HOOD 3.37%) as stocks that you may want to consider steering clear from. Let's go over my reasons for the near-term pessimism.
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AMC Entertainment
Last week should've been great for AMC shareholders. Spider-Man: No Way Home scored the country's second highest-grossing weekend for a film. AMC announced in the middle of the week that it would be reopening a couple of new theaters at locations once operated by rivals, another sign that it will keep gaining market share. The multiplex operator was able to get its revolving credit facility lenders to extend the existing covenant holiday for a full year. The stock still declined 2% during the holiday-shortened trading week.
This week isn't likely to be any better. After a slam-dunk opening weekend for the Spider-Man sequel, box office receipts for theater operators this past weekend fell back below where ticket sales were during the comparable weekend of 2019. Most movies continue to fare abysmally at the box office. Outside of a handful of a superhero flicks consumers aren't coming back to the silver screen. Even a highly anticipated action film -- James Bond's No Time to Die -- wound up having the weakest total gross among the five Daniel Craig-helmed Bond movies. It's not a good thing when the blockbusters are the outliers.
We're also in the final trading week of 2021, and it's easy to see why AMC will be under pressure. The stock is trading 61% below the all-time high it hit six months ago. The shares are falling for the fourth consecutive month. Most investors that have bought into the AMC story in the past seven months are in the red, and it will be awfully tempting to take a loss on the shares to offset realized capital gains elsewhere.
GameStop
I may as well double down on the meme stocks. Adding GameStop to this column last week worked out, as the shares dipped 2% in a very positive week for the market in general. The stock has also shed more than half of its value since its June highs, and the vast majority of new investors to GameStop over the past seven months are also underwater.
GameStop's model has some more optionality than AMC, but after another poorly received quarterly report -- it has fallen after posting earnings in 11 of the past 13 quarter -- it's not exactly ending the year on a high note. GameStop will be legendary for the mother of all short squeezes that sent it airborne 11 months ago. It's a different scenario now.
Robinhood Markets
There have been a lot of disappointing IPOs this year, but one of the biggest duds has to be Robinhood Markets. It priced its offering at $38, and five months later it has been cut in half. Unlike AMC and GameStop that are at least trading higher year-to-date, Robinhood Markets is pretty near the all-time low it hit just five trading days ago.
There's a crisis at Robinhood Markets. Traders are bailing. It posted a sequential dip in funded accounts in its latest quarter. It's too limited and restrictive with crypto trading, and new options traders are finding out how hard it is to win in a challenging market. It promises that crypto wallets, account transfers, and even IRA accounts are coming, but it's a prime candidate to come under selling pressure as folks realize capital gain losses on the out-of-favor trading platform.
If you're looking for safe stocks, you aren't likely to find them in AMC Entertainment, Gamestop, and Robinhood Markets this week.
