Connect with us

Hi, what are you looking for?

Investing

Meme stock mania is back: Why everyone is talking about GameStop, AMC and more again

Meme stocks are back.

One day after an account associated with the phenomenon posted for the first time in years on the X social media platform, shares in companies that have been linked to speculative trading activity are soaring in value.

Leading the way is video game retailer GameStop, whose shares have soared approximately 180% to $48.75 after closing at $17.39 Friday.

Other stocks rallying at eye-watering rates include AMC Entertainment Holdings, Blackberry and headphone-maker Koss Corp.

These firms have been generally unloved by most mainstream investors, as reflected in their previously desultory share prices.

But participants in the meme-stock mania have demonstrated an almost cult-like ability to imagine scenarios where the firms’ fortunes can be revived, creating astounding — and almost entirely speculative — run-ups in their share prices.

GameStop became the chief beneficiary of the first round of meme stock mania in late 2020 when Ryan Cohen, the co-founder of pet supplies group Chewy, announced he had a plan to revive the fortunes of the flagging company.

Fueled by online forum discussion, especially on Reddit, Cohen attracted an army of believers in his strategy that sent the value of GameStop stock to as high as $81.25 after never breaking $14 a share.

It didn’t exactly work: According to The Wall Street Journal, a string of executives hired by Cohen ended up quitting or getting fired. As recently as last month, GameStop shares had fallen back to just $11.

But on Monday, one of the chief meme-stock cheerleaders, known by the online moniker Roaring Kitty, posted a meme signaling he was planning to become active again.

The user, whose real name is Keith Gill and who was portrayed by Paul Dano in the film ‘Dumb Money’ about the birth of the meme-stock frenzy, not only sought to make money but was also determined to punish other traders who were selling GameStop shares and other stocks short, meaning they were betting that the share prices of those companies would fall.

By driving up the price and ‘squeezing’ these short sellers, Gill and his cohort created massive losses for the skeptics, which included large hedge funds and institutional traders.

Now, it’s happening again: CNBC reported GameStop short sellers are set to lose more than $2 billion at the stock’s current trading levels.

As far as anyone knows, the companies whose stocks are being traded as meme stocks haven’t actually done anything to reorient their fortunes in a way that would merit the tremendous run-up in their stock prices.

But that doesn’t mean they’re not taking advantage of the situation.

Tuesday morning, AMC announced it had raised $250 million off the run-up in its stock value from the near-doubling of its share price Monday (though it was just $3 to $5 per share).

It’s likely more companies could announce the same. Ironically, this action actually reduces the value of shares held by the speculators.

But the goals of meme-stock participants are not solely to make a quick buck.

“I support these retail investors, their ability to make a statement,” Gill told The Wall Street Journal in a 2021 interview.

This post appeared first on NBC NEWS
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

You May Also Like

Stock

Boeing’s spaceflight program may reach a significant milestone Monday night with the launch of its Starliner spacecraft, carrying — at long last — two...

Investing

Arcade chain Dave and Buster’s plan to allow customer betting isn’t winning over everyone. Software company Lucra Sports announced on Tuesday that it was working with...

Top News

It appears increasingly possible that Donald Trump could face actual jail time before we ever get a verdict in any of his four criminal...

Stock

A 17-year-old boy handed himself in to police after admitting that he attacked a German politician on Friday. Police say that Matthias Ecke, the...

Disclaimer: InvestorsOnRetire.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2024 InvestorsOnRetire. All Rights Reserved.