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On March 26, Donald Trump’s Trump Media & Technology Group (NASDAQ:DJT) marked his return to public company leadership. Trump Media stock soared to a high of nearly $80 per share following the debut but trades around $34 now.

With this sort of downside move, investors have to wonder if there’s an affordable way to build a short position in this stock. Basically, there isn’t.

The cost to borrow DJT stock sits at around 234% per the latest data from Fintel, and that’s down from a rate of more than 730% just four days ago. Implied volatility for put options also remains extremely high, making any such bet very expensive to put on.

That said, such a bet may still make sense for short-term traders, given the recent plunges this stock has seen following the release of its 2023 numbers.

Let’s dive into why this may be the case.

A Closer Look at Trump Media Stock

Despite an initial surge to $79.38 on March 26, Trump Media faced skepticism from Wall Street analysts who deemed it overvalued, likening it to “meme” stocks like GameStop (NYSE:GME).

A Trump Media spokesperson highlighted the company’s financial standing, stating Truth Social had no debt and over $200 million in cash, aiming to solidify its position as a free-speech platform.

Still, I think Trump Media stock will be going to zero, or something that approximates zero, in short order. The social media business is incredibly hard, as Elon Musk is finding out.

There are only so many folks that want to listen to the former president’s message and some would argue that base is diminishing. Mainstream platforms will dominate advertising dollars, leaving less for Truth Social and other right-leaning platforms.

The SPAC merger that brought Trump Media stock to the public markets briefly inflated Donald Trump’s wealth to more than $6 billion on paper, but without a way to sell his shares before his lockup period ends, I’m guessing most investors will be out far before then, fearing a flood of new shares coming onto the market.

Why Analysts Say It Will Crash

In a span of two weeks, Truth Social’s debut has seen more turbulence than any of its peers in the stock market. This has made traders question its reliability – such moves aren’t typically associated with healthy companies. Trump’s net worth from this deal has been halved, and there’s plenty more downside likely, according to analysts.

This widespread view appears to stem from the company’s tight association with the former president. His polarizing reputation will mean at least half the U.S. population won’t likely use the platform. Moreover, the media company’s exaggerated fluctuations can be attributed to its initially inflated valuation, which experts find irrational. Stocks with such excessive valuations often lack support when they begin to decline. Despite Truth Social’s significant user decline and minimal revenue in 2023, it debuted with a valuation reaching $11 billion, far surpassing its financial performance.

As noted by Matthew Kennedy from Renaissance Capital, Trump Media’s valuation is exceptionally high. Even if its stock plummeted by 50% daily for a week, its valuation would still far exceed that of its peers.

Avoid DJT Like Plague

Analysts suggest DJT stock has likely attracted primarily momentum traders. These traders could magnify market movements, quickly turning a 4% decline into a 12% drop. According to Kennedy, traders driven by momentum can swiftly sell based on negative news or its absence. 

Companies going public via IPOs or SPAC mergers often face initial volatility due to limited trading history and needing to be more established. Additionally, lock-up restrictions can withhold shares from insiders, impacting market dynamics.

In this case, I think DJT stock is about as cut-and-dried a short position as there is on the market right now. It’s an expensive short, but about as sure a bet as they come. The question is timing the move – that’s what I’m not good at, and why I’m not going to step into a position, given the astronomical cost to borrow here.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

There are seven meme stocks to sell in April before the worst comes to worst. Meme stocks are often driven by hype and social media frenzy rather than fundamental business factors, can be incredibly volatile and unpredictable. While the potential for big gains can be enticing, the risks involved shouldn’t be overlooked.

These stocks can experience sudden and dramatic price swings, fueled by the whims of retail investors rather than the company’s actual performance. This makes it extremely difficult to predict when the bubble might burst, leaving investors vulnerable to significant losses.

However, not all meme stocks are created equal; some are more risky than others. Therefore, in order for investors to protect their portfolios against volatility, i’ve selected seven meme stocks to sell for this article that one should carefully consider.

So here are seven meme stocks to sell before it’s too late. Don’t get caught up in the hype or Fear Of Missing Out (FOMO) at the expense of your portfolio.

GameStop (GME)

GameStop (NYSE:GME) has been a hallmark name in the meme stock frenzy. It minted millionaires, but many more have lost money buying 0DTE calls, trying to cash in on the apparent war against the hedge funds and other institutions.

Granted, there has been some impressive growth in tangible book value and levered free cash flow over the past three years, but analysts also anticipate a revenue decrease of 11.8% year over year to $1.09 billion for the first quarter ending April 2024.

Furthermore, GME’s current ratio and quick ratio suggest a strong liquidity position, although its return on equity and assets indicates less favorable performance compared to industry standards​.

The sell thesis for GME is this: The GME bandwagon has subsided considerably, as I believe that the reality of GME’s continually shrinking main line of business is starting to hit home for many.

GME’s 30-day historical volatility has steadily decreased since its peak in 2021, which suggests a diminished risk appetite among retail investors who once pumped its high flucuations.

Furthermore, GME’s 30-day implied volatility peaked this year near the start of March, reaching levels unseen for many years.

It should be noted that during this spike of implied volatility, an influx of put options were purchased as well, with open interest reaching 0.93 on the put-call ratio.

In my view, it’s hard to classify GME as having meme investors’ backing when historical and especially implied volatility has been declining to a significant degree and consistently over time. If the options market (which includes bears) is pricing in lower future volatility over time, then it suggests a stabilization in expectations from both bulls and bears. This stabilization implies that the market forsees fewer extreme swings in GME’s price, aligning more with fundamental trading than speculative bursts via social media trends or coordinated buying, which defines meme stock investing in the first place.

I don’t see a way forward for GME, so it’s then one of those meme stocks to sell.

Rivian Automotive (RIVN)

Rivian Automotive (NASDAQ:RIVN) experienced a notable decline from its peak stock price, facing challenges in ramping up production and maintaining investor enthusiasm.

RIVN projected a production target of 57,000 vehicles for 2024, following its performance in the first quarter where it produced 13,980 vehicles and delivered 13,588. The company also reported a net loss of $5,432 million, an improvement from the previous year’s $6,752 million. Its gross profit also saw improvement, with a loss of $2,030 million in 2023 compared to a loss of $3,123 million in 2022.

However, despite these improvements, in the same year, it had capital expenditures of $1,026 million, and ongoing need for substantial investment to scale production capabilities and develop new models.

I feel that the need for additional capital is a serious risk, as it could lead to share dilution for investors or substantially add to its financial risk via debt financing, which makes it one of those meme stocks to sell.

Marathon Digital Holdings (MARA)

Marathon Digital Holdings (NASDAQ:MARA) is a Bitcoin (BTC-USD) mining company that’s seen significant interest from investors due to the cryptocurrency market’s volatility and the upcoming Bitcoin halving event, which will occur in under two weeks at the time of writing.

I don’t generally suggest that investors should buy Bitcoin mining company stocks as they are risky investments. As the blockchain reward halves for Bitcoin, companies like MARA are under increasing pressure to maintain their margins, which then puts pressure on Bitcoin to increase in price to maintain stability.

Analysts project a final loss in 2023 with positive profits of $61 million expected in 2024, underpinned by an estimated average annual growth rate of 119%. 

The company specific-risk for MARA is that its strongly-invested in the Bitcoin mining industry and lacks diversification into other operating segments. It has one of the strongest hash rates in the industry at 24.7 in 2023, making it overly concentrated compared to its peers.

Nio (NIO)

Nio (NYSE:NIO), a Chinese electric vehicle manufacturer, has faced corrections due to concerns over its operating losses and the sustainability of its vehicle delivery growth​.

Analysts highlight concerns over declining electric vehicle deliveries and market share in China, pointing towards a challenging outlook for NIO. Furthermore, the company’s Q4 results showed margin contraction and widening losses, indicating the hurdles it faces in maintaining its growth trajectory and achieving profitability.

NIO is a meme stock that has also lost its appeal as the one to watch for the weak, and further risks of capital depreciation I feel are very real. It has already lost 47.96% of its value over the past year, and it seems likely that it will drop further due to the structural weaknesses in China and its shaky fundamentals. I therefore recommend that investors steer clear of NIO, and also designate it as one of those meme stocks to sell.

Polestar Automotive (PSNY)

Polestar Automotive (NASDAQ:PSNY) has drawn attention in the electric vehicle space but faces challenges in maintaining its stock value. Highlighting this, its share has dropped 83.09% in value over the past five years.

PSNY recently secured $950 million in external funding, which marks a new phase for the company. This is expected to be more significant in the second half of the year as their SUVs reach full production and distribution.

However, some cracks in the thesis start to appear when one examines PSNY’s financials. For instance, it has almost three times as much debt as cash and cash equivalents on its balance sheet, and had a negative cash flow of $1.8 billion over the past twelve months. More funding is needed for it to continue its operations, and this could very well come as a mix of both an equity raise and a raise through additional debt, which puts even more stress on the company.

Lyft (LYFT)

Lyft (NASDAQ:LYFT) is adapting to a post-pandemic world, focusing on profitability. However, it remains to be seen if these efforts can sustain its meme stock status​.

The company has had negative accounting profits over the last twelve months. However, in the future, it’s expected to reach profitability, but this comes at a steep price. Its forward P/E ratio is 35 times earnings, which is much higher than the median of its peer companies that also operate in the ride hailing market.

For the fiscal year 2024, LYFT anticipates gross bookings of approximately $3.5 billion to $3.6 billion for Q1’24, with an Adjusted EBITDA of $50 million to $55 million. The full year’s directional guidance suggests mid-teen year-over-year growth in rides.

However, this does not change the fact that its shares could still be perceived as overvalued, especially when one considers that it’s revenue is only expected to climb 12.33% next year and is already at 5.23 billion at the time of writing. It hasn’t managed to grow its bottom line despite its robust revenue growth, and I’m doubtful this will change in the foreseeable future.

AMC Entertainment (AMC)

AMC Entertainment (NYSE:AMC) became synonymous with meme stock rallies during the pandemic. Those days are long over, and traders looking to pump enthusiasm into this stock will end up getting burned sooner or later.

For 2024, AMC is expected to see a revenue increase, going from $4.55 billion in 2023 to a projected $5.26 billion. This optimistic revenue forecast suggests a rebound, including a forecasted increase in EPS from -1.63 to -0.81, indicating an improvement in losses. Analyst consensus on AMC’s stock leans towards a “Sell” rating, and I think this should not be taken lightly.

AMC’s issues are the same as GME’s; futile attempts at pivoting to a world and consumer preferences that no longer support its core business model. This kind of pessimism is well-deserved given its lack of a constructive track record, and is therefore one of those meme stocks to sell as well.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Video game retailer GameStop stock (NYSE:GME) can’t win for losing. Not even its first profit in four quarters could turn the tide of negative sentiment positive. The stock is down 37% in 2024 and has lost its half value over the past 12 months.

The stock sold off sharply after reporting fourth-quarter earnings late last month, wiping out all the gains made in the build up to the release. And it continues dropping in the aftermath. Now another executive is thrown out of the C-suite on his ear as executive chairman Ryan Cohen tightens his control over the video game retailer.

GameStop stock is a slow motion car wreck that continues to spin out of control. It’s a crash that’s been going on for three straight years since its meme stock heydey, but is GME stock at the point where it’s simply too cheap to ignore? Let’s see.

A dwindling business

The first first thing GameStop investors need to do is rid themselves of the notion that price is value. As Warren Buffett once noted, “price is what you pay, value is what you get.” A cheap stock price doesn’t necessarily mean it’s a valuable stock you’re buying. So far, GameStop hasn’t proved to the market that what it offers is worth buying. The question is, can it ever offer investors something of value? 

It’s a hard argument to make. Across all of its segments GameStop sales are falling and they have been for several years. 

Segment	% Change Q42023	% Change FY2023	% Change FY2022
Hardware & Accessories	(11.9%)	(4.6%)	(1%)
Software	(30.6%)	(16.5%)	(9.5%)
Collectibles	(25.4%)	(21.8%)	17.0%

Revenue tumbled almost 20% in the fourth quarter to $1.79 billion, and was well below the $2.05 billion Wall Street anticipated. While operating earnings were higher at $55.2 million, a 19% year-over-year gain, GameStop had cut its selling, general and administrative expenses by more than 20%. The $94 million it cut from SG&A more than made up for the $9 million gain in operating profits. It was all driven by firing employees, eliminating consultant costs and limiting its marketing.

GameStop is essentially hunkering down as its business spirals lower.

Clearing the decks

That explains why the video game retailer installed a revolving door in the executive suite. It helps get the management team out of the way. The latest to go was COO Nir Patel who joined GameStop in May 2022.

In a filing with the SEC, the retailer said Patel’s separation was effective immediately and he wouldn’t be replaced. His responsibilities would be assumed by other executives. Last June GameStop fired CEO Mike Furlong and opted not to replace him too. Instead. Chairman Ryan Cohen was made executive chairman and he overseas the company’s day-to-day operations now.

GameStop stock also closed down nearly 300 stores last year, ending 2023 with 4,169 locations. That helps to preserve the retailer’s cash, equivalents and short-term investments that stands at $1.2 billion. It’s notable and positive GameStop has little to no long-term debt, other than a low-interest, unsecured term loan stemming back to the pandemic. That at least gives the video game stock some flexibility. 

How low can it go?

So it is difficult to say GameStop’s stock is done falling. Although shares trade at a fraction of sales it sports a multiple hundreds of times earnings. That’s not necessarily uncommon for newly profitable stocks but it indicates there is an imbalance in the equilibrium between its business and the market.

Wall Street has all but given up on covering the company but those that remain are not hopeful. Wedbush Securities analyst Michael Pachter recently lowered his price target to $6 per share. That’s not unreasonable.

Where the bottom is is anyone’s guess. I’ll hazard it’s somewhere north of the $1 or so it was trading at prior to the meme stock frenzy, but well below its current $11 per share level.

On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.