Love them or hate them, meme stocks are back

By Saqib Iqbal Ahmed and David Randall

NEW YORK (Reuters) – Meme stocks are soaring again, delighting fans, frustrating detractors and showing Wall Street that the social media force behind the wild GameStop rally in 2021 is still going strong.

The American video game retailer is again the star, shooting up 340% over the last 10 trading days after a string of posts on the X platform from an account linked to Keith Gill, the central figure behind the previous frenzy.

Shares of other companies, including theater chain AMC headphones maker Koss and food storage container company Tupperware have followed suit. Like GameStop, many of the stocks are heavily shorted and their fundamentals have declined over the last few years.

“It’s hard not to use words like ‘insane’ when you look at this as a trader,” said Jay Woods, chief global strategist at Freedom Capital Markets. “The first time this happened, it was more of a movement, but right now this looks like a craze where people are saying, ‘Here’s an opportunity’ and ‘Let’s see if we can make a quick buck off of it.'”

Here is a quick, chart-based look at some of the factors driving the resurgence of the meme stock phenomenon.

Despite their recent stunning gains, GameStop and other meme stocks still have a ways to go before they match the advances in 2021. GameStop shares shot up as much as 1,700% that year, while AMC’s surged 2,850% and U.S. listed shares of Blackberry rose nearly 280%.

Many of these companies have been the target of short sellers – investors who look to profit from selling borrowed shares betting the stock price will fall.

Short interest in GameStop climbed steadily this year before hitting a 20-month peak of 25% in mid-April, a couple of weeks before the shares started rallying.

That is well below the peak level of short interest in October 2020 when about 107% of the free share float for GameStop was sold short, exchange data shows.

The rallies have dealt short investors a heavy blow. In GameStop alone, year-to-date paper losses totaled $1.28 billion, estimates from ORTEX showed.

Still, there was little…

..

Read More

Recommended For You

Leave a Reply

Your email address will not be published.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

Discover more from Investor News Blog Finance Exchange News

Subscribe now to keep reading and get access to the full archive.

Continue reading