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How one investor applied lessons from the meme stock frenzy to blockchain and NFTs

Almost two years ago, during the first winter of the COVID pandemic, Roman Tirone was introduced to the world of meme stocks.

“I think a few friends reached out to me and I took a look,” the New York-based investor told MarketWatch. “There was a strong community that was pretty confident that it was going to push stocks up.”

Those were indeed heady days for darling meme stock AMC Entertainment Holdings Inc. AMC,
+2.31%
as investors pushed the stock to a high of $72.62 on June 2, 2021. AMC closed at $18.21 on Wednesday, well below its 52-week high of $52.79, which it reached September 13, 2021. Game Stop Corp .GME,
+1.90%
climbed to a 52-week high of $63.92 on November 3, 2021, but ended Wednesday’s session at $37.93.

Caught up in the momentum of the meme stock community, Tirone made significant investments in AMC and Game Stop. “At first everything was great, then things started to go downhill,” he told MarketWatch.

See now: AMC may have been a darling of meme stocks, but weakness in some key areas has put the company on shaky ground

However, he was able to apply what he learned elsewhere. “I ended up taking what I learned about digital communities, online investing and new speculative assets, and applied that to blockchain and NFT investing,” he said. declared.

An NFT, or non-fungible token, is a unique digital asset that leverages blockchain technology to verify ownership or exchange tokens. A growing number of companies are getting involved in NFTs. eBay Inc. EBAY,
-4.42%,
for example, recently launched its first collection of NFTs, which features animations of athletes from the covers of Sports Illustrated.

Blockchain, which has grown in popularity in recent years, is a decentralized digital ledger of transactions. The technology is used to underpin cryptocurrencies such as bitcoin.

“I learned a lot about how to read momentum, understanding how and when a community is a signal, both good and bad, and how generally there are levels within a community… whether it’s someone who is a lifelong investor or someone just passing through,” Tirone added. “You can’t get caught up in the inner fervor of other people’s ideas when it comes to investing.”

After applying what he saw in the world of meme stocks, Tirone now describes himself as an NFT collector. Specifically, Tirone focuses on NFT collectibles, art, and Play-2-Earn games, where players are rewarded with NFTs or cryptocurrency.

The market for NFTs, or non-fungible tokens, has boomed in recent years, but cooled off somewhat this year amid the crypto crash.

See now: AMC ‘compressible’, GameStop shares reach multi-month highs

Nonetheless, Tirone says his transition to blockchain and NFT investing has been “life changing.”

Despite pivoting to a new investment strategy, the investor maintains a small position in AMC. “I still have some AMC – it’s a small fraction of what I originally owned,” he told MarketWatch. “It’s more of a symbol for the cause at this point.”

The cause, Tirone explained, has to do with the little guy. “At the highest level, it’s an underdog story where people who lose usually have a chance of winning,” he said.

Bespoke Investment Group analyst George Pearkes told MarketWatch that the massive bullish volatility in meme stocks is clearly playing out. However, he called the meme stocks “stickier in the exits” with some investors unwilling to drop the stocks. “The inflows come in really big and really fast, and then the outflows flow,” Pearkes said.

See now: Here’s the little-known reason why Cathie Wood’s ARK Innovation ETF is having such a bad year

To illustrate his point, Pearkes pointed to the “rough journey” that the ARK Innovation ETF ARKK,
+1.15%
has been running since its peak in 2021, noting that some investors are still determined to own the ETF. “It’s pretty standard investor behavior and I think it applies to meme stocks as well,” he said.

The ARK Innovation ETF is down 48.7% year-to-date. AMC shares are down 33% in 2022 and Game Stop is up 2.2%. The S&P 500 SPX index,
+0.08%
is down 12.8% over the same period.

AMC reports second-quarter results after the market closes Thursday.

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