The Problem With Meme Stock ETFs and Timing

GameStop doubled again, fueling gains in ETFs that hold the stock and reminding investors of the MEME fund.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: Ron Day

Meme stock mania returned for a second day, boosting a group of ETFs while also reminding investors of how volatile shares like GameStop Inc. can be and raising questions about the wisdom of chasing rapidly vanishing gains and losses.

The video game retailer was last trading higher by 65% after more than doubling to nearly $65 per share, a near-quadrupling compared to the stock’s Friday closing price of $17.46. Earlier this week, shares gained 75% on Monday, and at one point during the session had more than doubled.  

Many of the 87 U.S.-listed exchange-traded funds that hold GameStop stock are benefiting from the spike.

The Amplify Video Game Tech ETF (GAMR), which holds a 3.1% weighting in the stock, gained 1.9% on Monday and another 5.5% on Tuesday.

The Schwab Crypto Thematic ETF (STCE), which has a 1.9% stake in the company, rose by 3.2% on Monday and 4.9% on Tuesday.

GameStop’s reemergence as a meme stock is unfortunate timing for the now-defunct Roundhill MEME ETF (MEME). That fund shut down in December due to a lack of interest from investors. It only had $3 million in assets under management.

At the time of its closing, MEME held a 4.1% position in GameStop, as well as sizable holdings in Affirm, Coinbase, Spirit Airlines, and Robinhood—other meme stocks and quasi-meme-stocks that have soared this week.  

MEME’s shuttering is indicative of the difficulties in timing meme stocks and how ephemeral their gains can be. The exchange-traded fund launched in Dec. 2021, 11 months after GameStop’s first meme stock rally ended.  

Then it shut down this past December, five months before the next meme stock rally kicked off.

In other words, MEME missed both meme stock rallies, but was exposed to all of the meme stock downside.

It’s a cautionary tale for fund issuers who might decide to launch similar ETFs in the future: timing is everything when it comes to meme stocks.  

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.