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Illustration: Lazaro Gamio/Axios

Wall Street analysts are bowing out of the hottest investment trend of the year.

Driving the news: The latest to throw in the towel is Baird, which as of today will no longer cover OG meme stock GameStop.

Why it matters: Longtime researchers are giving up trying to make sense of the meme stock frenzy — the latest sign of Reddit traders upending the old guard.

  • Bank of America and Telsey Advisory Group both stopped covering GameStop earlier this month.

The big picture: Analysts say Reddit-fueled trading is too detached from the video game retailer's actual business.

  • "[S]ocial media influences and other factors ... make it difficult, at least in the near term, to make a reasonable stock rating recommendation," Baird's Colin Sebastian wrote today about GameStop.
  • Bank of America also previously dropped its rating for fellow meme stock Bed, Bath & Beyond.

What they're saying: "I can understand why many are hanging up their hat right now because the things they do to predict the value of these stocks are broken," says Christine Short, vice president of Wall Street Horizon.

  • "If there is an approach to it ... it would be something around scraping tweets, activity on different blogs and trying to get a sense of the psychology," not typical fundamentals, says Gene Munster, a former research analyst who now runs Loup Ventures.

Where it stands: Just three analysts track GameStop now, according to FactSet — down from 10 before the mania took hold last year and the peak of 22 in 2014.

  • Where they see the stock finishing in 2021 ranges from $10 to $190. (GameStop's stock closed at $213 today.)

The bottom line: What Wall Street analysts covered once signaled what big-money institutional investors should pay attention to, says Leigh Drogen, founder of Estimize.

  • "The genesis of that attention has moved ... to 'what the hell is going on on Reddit boards?'"

Go deeper

Felix Salmon, author of Capital
Sep 30, 2021 - Economy & Business

The problem with individual stock buying

Illustration: Megan Robinson/Axios

Buying and selling individual stocks is a hobby for rich people that, over the course of the pandemic, also became a hobby for millions of new investors using free trading apps. But given the number of conflicts involved, it's a hobby that many people should probably give up.

Why it matters: In recent days we've seen shock headlines about the stock-trading activities of judges and corporate insiders. Two Federal Reserve presidents resigned after they were revealed to be actively trading the markets they were also influencing via monetary policy.

Mike Allen, author of AM
2 hours ago - Politics & Policy

GOP senator calls for senility test for aging leaders

Photo: "Axios on HBO"

Sen. Bill Cassidy (R-La.), a physician, told me during an "Axios on HBO" interview that he favors cognition tests for aging leaders of all three branches of government.

Why it matters: Wisdom comes with age. But science also shows that we lose something. And much of the world is now run by old people — including President Biden, 78 ... Speaker Pelosi, 81 ...  Senate Majority Leader Chuck Schumer, 70 ... and Senate Minority Leader Mitch McConnell, 79.

Ina Fried, author of Login
2 hours ago - Technology

Intel CEO blames predecessors for manufacturing woes

Axios on HBO

When it comes to Intel's recent manufacturing problems, Intel CEO Pat Gelsinger places the blame squarely on his predecessors — many of whom he notes were not engineers deeply steeped in chip technology, as he is.

Why it matters: Gelsinger has announced a broad plan to reinvigorate Intel by doubling down on manufacturing. However, the strategy depends on the venerable semiconductor giant recovering from recent stumbles.