Shares of GameStop, AMC and others are fueling a revival of meme stock trading, catching many investors off guard, especially those who think these shares are ultimately going to drop.
GameStop shares are skyrocketing for a second day, adding to the 74% rally on Monday fueled by the unexpected social media return of retail investor "Roaring Kitty" after a three-year hiatus.
Other meme stocks, such as AMC and Beyond Meat, also saw big gains. Heavy trading is prompting multiple trading halts on many of these names.
Roaring Kitty, also known as Keith Gill, marked his return with a Sunday post on X of a drawing of two gamers – one appears to be leaning in, noted by a red arrow. This sparked a buying frenzy in the stocks favored by Reddit users and other retail investors despite no concrete news, and also the ones that are heavily shorted or those that investors are betting against.
GAMESTOP FRENZY: WHO IS ROARING KITTY?
"It wasn't just GME rallying yesterday; it was a lot of the most heavily shorted stocks in the market," Bespoke Investment Group wrote in a note to clients. "This type of action with no basis in fundamentals is simply not worth chasing as you're bound to get burned eventually. Be very careful out there!"
In the hours following, Roaring Kitty posted more veiled posts, mostly with fight themes, using clips from "Ferris Bueller's Day Off," which morphed into "Breaking Bad" the poignant "No Fighting" scene delivered by Cillian Murphy from "Peaky Blinders" and "Tombstone" starring Kurt Russell.
Tuesday, social forum StockTwits noted AMC, GameStop as leading their top trending symbols, along with Mullen Automotive and Alibaba.
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Since the beginning of May, short sellers, or those betting GameStop shares will fall, have lost $2.53 billion, according to data compiled by Ortex. More than $1.28 billion was racked up Monday.
Shares of the video game retailer have gained over 244% this year, but remain 30.5% lower than the all-time closing high of $86.88 on January 27, 2021, as tracked by Dow Jones Market Data Group.
As for GameStop’s fundamentals, sales in the fourth quarter were $1.79 billion compared to $2.2 billion during the same period a year-ago. Net income was $63 million, up from $48 million a year-ago. The retailer did not hold a conference call with investors in March.
CEO Ryan Cohen, who also co-founded Chewy.com, took the helm in September 2023. His RC Ventures is the company’s largest individual stockholder, owning nearly 37 million shares, according to Thomson One.
FOX Business' inquires to GameStop were not immediately returned.
