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Wall Street analysts are pulling out of the hottest investment trend of the year.
Driving the news: The latest to throw in the towel is Baird, who as of today will no longer cover the stock of OG GameStop memes.
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Why is this important: Longtime researchers are giving up on trying to make sense of the memes’ stock market frenzy – the latest sign of Reddit traders toppling the old guard.
The big picture: Analysts say the commerce powered by Reddit is too detached from the actual business of the video game retailer.
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“[S]Influences from social media and other factors… make it difficult, at least in the short term, to make a reasonable action rating recommendation, â€Baird’s Colin Sebastian wrote today of GameStop.
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Bank of America also previously lowered its rating for Bed, Bath & Beyond.
What they say : “I can understand why a lot of people are hanging up their hats right now because the things they’re doing to predict the value of those stocks are broken,†said Christine Short, vice president of Wall Street Horizon.
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“If there is an approach … it would be something around scratching the tweets, activity on different blogs and trying to get a feel for the psychology,” not the typical fundamentals, says Gene Munster. , a former research analyst who now runs Loup Adventures.
Where he is : According to FactSet, only three analysts are now tracking GameStop – up from 10 before the mania set in last year and the peak of 22 in 2014.
The bottom line: What Wall Street analysts once covered indicated what big-money institutional investors should pay attention to, says Leigh Drogen, founder of Estimize.
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