Wall Street analysts foresee a 40% drop in the average meme stock, led by an AMC wipeout

People walk outside the AMC Empire 25 movie theater in Times Square as the city continues the re-opening efforts following restrictions imposed to slow the spread of coronavirus on December 23, 2020 in New York City.
Noam Galai | Getty Images

Meme stocks are popping this week, but Wall Street analysts who study the fundamentals believe big declines are looming.

Speculative trading from retail investors, many active on Reddit's WallStreetBets forum, are taking these meme stocks to new heights. The stocks include AMC Entertainment, GameStop, BlackBerry and Bed Bath & Beyond.

AMC shares closed at an all-time high of $62.55 on Wednesday, but the average 12-month target price of analysts is 91.8% lower, according to FactSet.

"AMC has survived the pandemic but comes out the other end massively diluted and still over-levered," Alan Gould of Loop Capital Markets said in a note Monday.

"Fundamentally, the exclusive theatrical window has shortened, fewer movies are being released theatrically, industry-wide fewer theaters have closed than anticipated, and streaming has become more pervasive," Gould said. "Eventually the valuation will reflect the fundamentals."

CNBC Pro looked at how much lower the Street predicts prices of nine meme stocks will drop in the next 12 months. Take a look:

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