It’s Time to Retire the ‘Meme Stock’ Tag for America’s Legacy Companies

It's time to drop the 'meme stock' label for legacy companies like GameStop and AMC. These brands have decades of history and real value, challenging Wall Street's 'smart money' narrative.

Oct 25, 2024 - 16:06
Oct 25, 2024 - 16:39
It’s Time to Retire the ‘Meme Stock’ Tag for America’s Legacy Companies
Time to Drop the ‘Meme Stock’ Label for America’s Legacy Brands

It’s time for Wall Street to retire the term “meme stock” when discussing legacy companies like GameStop and AMC. The casual dismissal of these established brands as “meme stocks” implies they’re merely speculative novelties driven by online fervor. This oversimplified narrative ignores a simple truth: these are legacy brands with storied histories and deep roots in their respective industries.

They were founded long before today’s tech giants like Amazon or Meta, and they’ve built empires that have weathered numerous economic storms. GameStop and AMC are not here by accident, nor are they recent inventions of the Reddit crowd. They’ve earned their place, and while they face challenges like any business, calling them “meme stocks” is a misunderstanding that reflects Wall Street’s resistance to changing market dynamics and a tendency to overlook the staying power of companies that don’t fit into convenient molds.

Consider GameStop. Founded in 1984, GameStop grew from a small software retailer in Texas into the world’s largest video game retail chain. GameStop has had a hand in the gaming industry’s growth, giving players a place to buy, trade, and discuss games for nearly 40 years. It’s more than a store—it became part of the cultural fabric of gaming long before gaming was mainstream.

The company flourished as the go-to destination for game enthusiasts looking to get their hands on the latest releases or trade old games, a precursor to today’s model of recycling and reselling that even online giants are attempting to replicate. This is not a business without value, and to dismiss it as a “meme” ignores the contributions it has made to an industry that now dwarfs Hollywood in revenue.

GameStop’s issues are clear. Physical retail is tough, and the shift toward digital gaming means that GameStop’s original model has become less sustainable. Yet, instead of quietly fading away, the company has shown resilience, adapting in ways that show it’s still in the fight. In recent years, GameStop’s management has pivoted its focus towards e-commerce, digital assets, and restructuring its retail footprint.

The retail frenzy of 2021 that saw GameStop’s stock soar had roots in a combination of underappreciated fundamentals and the dedication of a retail investor base tired of Wall Street’s control over narratives. But that rally was quickly dubbed a “meme” phenomenon, as if no rationale beyond internet chatter could justify GameStop’s valuation. The reality is that investors saw value in a brand that, despite struggles, still holds significant assets and customer loyalty. The “meme” label was simply a shortcut for Wall Street to dismiss what it didn’t understand.

And then we have AMC, the world’s largest movie theater chain, a company that has been part of the entertainment landscape for over a century. Established in 1920, AMC didn’t just survive but thrived through countless challenges—the Great Depression, multiple recessions, the rise of home entertainment, and now the age of streaming. This company is an institution, not just in the U.S. but globally. If the lights are on in a theater anywhere in the world, chances are it’s an AMC screen. This isn’t the kind of business that can be propped up by a handful of Redditors. It’s a business model that has endured changes in consumer habits for decades, a testament to its management’s ability to adapt.

Yes, AMC faces challenges, especially in an era where streaming is more accessible than ever. But it’s worth noting that AMC has taken proactive steps to diversify, even dabbling in cryptocurrency acceptance and hinting at using its vast theater network for e-sports or live concerts. The fact that it became one of 2021’s biggest “meme stocks” wasn’t just a coincidence; it was a response to the dismissive attitude Wall Street has often shown towards businesses outside of technology. Retail investors saw AMC’s intrinsic value and its potential for transformation, not just its current cash flow issues.

The broader implications of this “meme stock” label reach beyond GameStop and AMC. Nokia, founded in 1865, became a telecommunications giant and, for many, the introduction to mobile technology. Today, it’s often lumped into the “meme stock” group simply because retail investors chose to rally around it.

Yet, Nokia’s influence in telecom infrastructure remains relevant, especially as global 5G networks roll out. Likewise, BlackBerry, the pioneer of mobile security and a status symbol for the early smartphone era, is still in business, focusing on software and cybersecurity. But due to a surge in retail interest, it, too, gets the “meme” treatment, as if it’s little more than a curiosity.

What’s notable about these examples is that they all represent companies that not only helped define industries but also hold assets, intellectual property, and market positioning that give them a path forward—if Wall Street would look beyond the label and see these companies’ intrinsic potential. In labeling these companies as “meme stocks,” Wall Street is overlooking something profound: the agency and intelligence of retail investors who are using new platforms to make their voices heard.

It’s easy to call these movements irrational, but when retail investors point out undervalued assets or spot potential in brands Wall Street has long abandoned, that’s not “dumb money.” It’s a recalibration of priorities in an industry long focused on immediate gains over long-term value.

The irony here is that Wall Street has had its share of irrational exuberance. Over the years, we’ve seen tech bubbles and the over-leveraging of assets that, on paper, looked revolutionary but ultimately crashed, leaving retail investors to pay the price. WeWork, once valued at $47 billion, fell from grace after Wall Street’s “smart money” poured in without scrutinizing the business model. Similarly, Theranos, backed by sophisticated investors, was later exposed as a fraud. And let’s not forget the 2008 financial crisis, a fallout from the very same industry that now dismisses retail enthusiasm as misguided.

By clinging to the “meme stock” label, Wall Street is avoiding a reckoning with its own failures. These companies, labeled “meme stocks,” have shown resilience and adaptability, qualities that Wall Street once valued. GameStop and AMC might not look like traditional growth stories, but they’re still here, still adapting, and, notably, still making headlines—not for collapsing but for persisting. Retail investors see something that traditional analysts might miss: a sense of opportunity beyond quarterly earnings and beyond the typical frameworks of risk and reward.

As for Wall Street’s “smart money” designation? Perhaps it’s time for a rebranding. When the same institutions that crashed the housing market, missed the tech bubbles, and poured billions into pipe dreams now point fingers at retail investors, it feels less like financial wisdom and more like an aversion to accountability. Retail investors have exposed a disconnect between Wall Street’s perception and the reality of what these companies represent to everyday people.

So maybe, instead of calling GameStop, AMC, and others “meme stocks,” we should consider what that term says about the industry using it. Wall Street’s “smart money” has consistently underestimated the value of these brands and the potential within a highly motivated investor base. Maybe the more accurate term here isn’t “smart money” but “slow money”—or, as some would cheekily suggest, “dumb money,” unable to learn from its past and quick to dismiss forces that don’t fit its playbook.

In the end, GameStop, AMC, and their retail champions may be the disruptive element that traditional finance never saw coming, but that doesn’t make them memes. It makes them relevant, influential, and most of all, a sign that the world of investing is changing, whether Wall Street likes it or not.


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