It looks like the meme stock craze is here to stay despite some questioning its longevity and reliance. AMC Entertainment (AMC) and GameStop (GME) are among the most notable stocks in this emerging segment of the stock market.

The meme stock craze

Judging by AMC and GameStop's performances this year, it seems that they could continue to benefit from increased social interactions between retail investors despite the status of their fundamentals.

However, investors should also keep an eye on developments in trading activity after several meme stock prices pulled back at the beginning of the month. European trading platform Capital.com reported that AMC trading volume dropped by about 68% on 31st August, just a week after the company topped trading activity on the platform.

In a note to investors, David Jones, Chief Market Strategist at Capital.com said, “the so-called ‘meme stocks’ were back in focus last week with the likes of AMC Entertainment posting sizeable moves.  There seemed little rhyme or reason to this  - late summer can be something of a ‘silly season’ when it comes to market moves so it seems appropriate to consider that the substantial moves came from this area.”

Noting the unlikelihood of meme stocks retesting June highs, he pointed to rising inflation as a major concern, adding that the market is witnessing a significant shift towards safe-haven assets like gold.

Other companies to experience significant declines after a sharp spike in the final week of August include, Support.com (SPRT) which gained more than 300% in the six days before 1st September, before falling more than 11%, while Aterian (ATER) fell 12.4% after gaining more than 60%.

Meme stock ETF?

Nonetheless, things are still looking bright for meme stock investors after Roundhill Investments announced plans to launch an Exchange-Traded Fund (ETF) for meme stocks.

The new ETF will join a growing list of ETFs launched by the firm to track innovative industries.

The firm already has six ETFs tracking companies in the video streaming industry and iGaming, among others. 

The company is in the process of filing with the SEC for the launch of the ETF, which will trade under the ticker MEME at the NYSE. It will track members of the Solactive Roundhill Meme Stock Index. 

AMC Entertainment is tipped to become one of the earliest members of the index, thereby making the stock a part of the meme stock ETF. 

ETFs and Indices provide an alternative to investors that prefer low-risk channels of investing. And based on the meme stock investing experience since the beginning of the year, the high rate of return that comes with buying meme stocks also comes with premium risk attached to it.

Therefore, investing in a pool of meme stocks could help to leverage the risk at a time when investors are becoming more conscious about inflation. This could also bring some stability to the segment of the market.

So should you buy meme stocks now?

Meme stock prices rise and fall depending on social media mentions and interactions on Reddit’s WallStreetBets forum. They are not backed by fundamentals, thereby making their price movements harder to forecast.

However, while some mainstream Street investors continue to classify meme stock investing as mere speculation, some meme stocks gain the attention of retail investors because of their potential. 

For instance, AMC became a meme stock in the anticipation of a reopening of theaters while GameStop has gained substantially due to the growing iGaming industry.

Therefore, although the meme stock craze seems to have recently cooled down after spiking late last month, it appears poised to continue disrupting markets for the foreseeable future. As a result, more opportunities will continue to crop up, meaning it would be best to keep an eye on events including the ETF launch.