Meme stocks typically gain popularity based on unbridled social media exchanges rather than on their fundamental strength and growth-potential analysis. This makes them highly speculative and susceptible to head spinning volatility. The skyrocketing rallies of Palantir Technologies (PLTR), BlackBerry (NYSE:BB), and Senseonics (SENS) on the meme craze have made them highly overvalued with respect to their growth potential, at least as indicated by the price targets set by Wall Street analysts. Hence, we think these stocks are best avoided now. Read on.Meme stocks have regained traction following the GameStop (NYSE:GME) short squeeze in January this year. Popularized by online community Reddit r/WallStreetBets, meme stocks have been major market movers over the past couple of months, with certain stocks garnering manifold gains. Reddit co-founder Alexis Ohanian described meme stocks as the intersection of community and capital and social media and finance.
However, meme stocks typically gain popularity through social media platform discussions, facilitated by retail investors’ rising interest. These stocks tend to be overlooked and are often sold short by institutional investors and hedge funds.
Most of the meme stocks now look overvalued by traditional measures Palantir Technologies Inc. (PLTR), BlackBerry Limited (BB), and Senseonics Holdings, Inc. (NYSE:SENS) look highly overvalued at their current price levels given their weak growth prospects. The price targets set by Wall Street analysts for these stocks indicate that they could suffer significant declines in the near term. So, we think these three stocks are now best avoided. Palantir Technologies Inc. (PLTR)