3 meme stocks to sell in August before they crash and burn

The stock market is starting to lose momentum. After an all-time high, stocks have fallen sharply in recent weeks.

The reasons are diverse, including geopolitical worries, a financial shock in Japan, changes in the US presidential election race and uncertainty over interest rate policy. Regardless of the precise cause, market volatility has increased and traders are reducing risk.

This makes it a great time to take a fresh look at more speculative properties, such as in meme stocks. These three meme stocks to sell in particular may have seemed like good ideas in a bull market, but they may face a much tougher road ahead.

Caravan (CVNA)

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Carvan (NYSE:CVNA) is an automotive retailer that shook up the industry with its innovative drive-thru-style used vehicle retail locations.

However, while Carvana has a differentiated business plan, its financial results have been disappointing. In fact, despite the wonderful conditions in the used car market coming out of the pandemic, Carvana has struggled to make money.

And now, amid high interest rates, the used car market has plummeted.

If Carvana couldn’t make money when consumer spending was high and the auto market was hot, it’s hard to see how Carvana will fare much better in a recession. CVNA’s stock has soared off the lows thanks to escaping bankruptcy worries a few years ago, but that hardly means the company is particularly promising today.

AMC Entertainment (AMC)

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The show is over for AMC Entertainment (NYSE:AMC), and it’s time to turn off the lights.

In 2021, traders were excited that AMC could skyrocket during the initial meme stock mania. And indeed, AMC stock is up more than 10 times from its lows at one point. Those heady days are long gone, though.

AMC has failed to turn that meme magic into tangible results. The company continues to lose money, has an unstable balance sheet, and the economic reopening story is long over.

In fact, in its most recent quarter, AMC announced a shocking 24% year-over-year drop in box office receipts and a 25% drop in food and beverage revenue. For a company saddled with debt and operating losses, this downward trajectory is most worrisome.

Joby Aviation (JOBY)

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Marketers were excited about the possibilities for electric vertical take-off and landing (EVTOL) vehicles, or what are often called flying cars.

Joby Aviation (NYSE:JOBY) was one of the leading names in the EVTOL trade. The company’s market cap topped $5 billion at one point last year as people imagined the potential upside.

However, Joby still has a long way to go before it can prove that the business model works. Founded in 2009, Joby has yet to receive final Federal Aviation Administration (FAA) approval for its EVTOL model as the five-phase certification process continues to unfold.

Joby still has no significant commercial revenue and is losing around $500 million a year on operations. A short-selling hedge fund has also criticized Joby’s business model, suggesting that future estimates of Joby’s profitability are “delusional”.

In a raging bull market, this kind of highly speculative action could work. But with the stock market entering a tougher period, JOBY is the kind of meme stock that is likely to lose altitude quickly.

At the time of publication, Ian Bezek did not hold (either directly or indirectly) any position 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.

At the time of publication, the responsible editor had (either directly or indirectly) no position in the securities mentioned in this article.