Rivian leads meme stocks GameStop and Blackberry lower

After 2021’s meme stock frenzy, this year has not seen as much activity for GameStop, Rivian and Blackberry, although the former is still outperforming thanks to its recent partnership with crypto exchange FTX.

Meme stocks GameStop [GME], Blackberry [BB] and Rivian [RIVN] have all dramatically underperformed the general market this year. Defensive stocks, with an established market presence and greater stability during economic or market downturns, have outshone meme stocks in the wake of market volatility.

The GameStop share price has tumbled 24.2% in the year to 14 September and is down 76.7% from its 2021 high. BlackBerry, another stock favoured by retail investors over the past 18 months, has seen a greater decline of 36.3% this year. However, US electric vehicle manufacturer Rivian has seen the greatest fall in value of 61.3% in 2022 to date.

The Roundhill MEME ETF [MEME], which has a considerable stake in all three stocks, has declined 52.6% since the start of 2022, summing up the general performance of meme stocks this year. A major factor for the fund’s heavy decline is its major holding in Rivian, which at 4.35% is the fund’s largest holding.

Rivian and Mercedes plan EV factory

The Rivian share price plummeted this year as weaker supply chains delivered production woes for the Amazon-backed EV maker. The company was forced to lower its production forecast for the year to 25,000 from what could have been 50,000 units produced in 2022. It was able to produce 4,401 vehicles in the second quarter of the year and insists it is on track to meet its full-year production target.

However, Rivian shares have risen 20.7% in the past week, helped by the news that the company is partnering with Mercedes-Benz to build a new European facility to produce electric vans for both companies. While this will help Rivian lower the costs of expansion into Europe, the facility is not likely to start production until after 2025.

Despite the large declines this year, analysts are upbeat about Rivian shares. Out of 18 analysts polled by the Financial Times, five rated shares a ‘buy’, eight believe the shares will ‘outperform’, there were six ‘hold’ ratings and one ‘underperform’.

GameStop rallies on FTX partnership

As the meme stock craze has softened in the past few months, companies that were championed by retail investors have had to rely on fundamentals to keep their lofty valuations. GameStop’s performance has flagged in recent months and the share price has declined as a result. In its second quarter results, the group saw total sales drop to $1.14bn from $1.18bn the year before, while losses grew to $108.7m from $61.6m for the same period the year before.

The company has been struggling to shift its business to the digital landscape, while also trying to cut costs and rearrange its leadership in an attempt to stimulate growth.

GameStop shares received a boost after its recent earnings report, in which it announced a partnership with crypto exchange FTX. The partnership will focus on new ecommerce, online marketing initiatives and the sale of FTX gift cards. This news has kept shares afloat in recent weeks and allowed GameStop to lead Rivian and Blackberry shares this year.

Nevertheless, enthusiasm is scant regarding shares of the company. Of the three analysts polled by the Financial Times, one recommended to ‘hold’, another predicts they will ‘underperform’, and one recommends to ‘sell’.

Blackberry fails to reignite growth

Blackberry was another share favoured by retail investors in 2021, with its price surging to over $28 at its peak. Since then, the share price has tumbled down to $5.96 on 14 September as the meme stock surge lost momentum.

The group has reinvented itself over the past few years and has shifted its focus toward cybersecurity. In a major move, it acquired Cyclance AI in 2019 to bolster its cybersecurity portfolio.

The group, however, has not been able to reinstate growth in the country in the past few months. Revenue for the three months ending 31 May fell to $168m from $185m in the previous quarter. While the group was able to grow cybersecurity revenue to $113m from $107m the year before, its licensing sales fell 83% to only $4m.

Analysts are similarly downbeat about the future of Blackberry shares. Out of seven analysts polled by the Financial Times, two gave ‘hold’ ratings, four believed that the shares would ‘underperform’ and one recommended to ‘sell’.