Entry timing can make or break even the best investment idea. I’ve recently been looking into some new speculative plays like $FUBO. Something I’m being cognizant of though is price inflation of speculative stocks from the Reddit Bubble. Given the hype behind the Bubble that was GME and AMC, many other reddit and semi-reddit names were taken up with them(also BTC, Doge, etc). While most of these are worthless companies some, like FUBO have potential to be great companies. That being said using FUBO as an example of something I’m looking to enter; I see their $45 stock representing a $3.2B market cap while they only did $175MM in revenue in 2020. The fundamentals aren’t there but I still see them doing great things in the future, so now we look to enter with technicals instead of valuation.
GME started the major part of its run on 1/22 and peaked on 1/28 ($48 - $483 lol). FUBO moved from $34 to $57 during this time or 68%. At the same time the market was crashing/volatile and there was no news for either company, signals speculative buying obviously. GME has since fallen by a lot and FUBO by 20% from that peak. I want to stress that I don’t deny that FUBO could be back in the 50s in the coming months so my goal is to enter as low as possible. As it continues to fall with GME, I’ll look to get in when GME gets back to the 20s (Which I’m certain will be soon). Recognizing that FUBO didn’t loose all of its gains also shows that it is a real winner of the speculative stocks here.
We can also use Beta to understand where FUBO might have traded if the GME hype had never happened. Beta tracks how much a single stock has outperformed the Market. So if FUBOs seen more growth than the S&P it will have > 1 beta. given that their Beta is 2.0, the S&P moved 3% since the GME fiasco; FUBO would theoretically have moved up by 6%(34->38) in this given time. That being said $38 might not be a bad entry price to look at barring the tracking of GME demise. It will be interesting to see how this analysis holds up altogether meaning will FUBO be around $38 when GME is back in the $20s, I think its very possible and offers a lucrative entry.
TL;DR Track the downfall of GME/AMC to find ideal entries to other meme/speculative stocks that ran up at the same time. use beta to understand where they might have been if the GME fiasco didn't occur.