Sun, June 16, 2024

Meme Stocks Soar: GameStop Up 126%, AMC 88%

Stocks and important factors

Quick Look:

  • GameStop rose 126%, causing $1.8B in short-seller losses; AMC increased 88%, with $157M losses for short sellers.
  • Investors’ fear of missing out, spurred by influencers like Roaring Kitty, drove the rally.
  • Keith Gill’s return to social media significantly boosted meme stock interest and prices.
  • Despite losses, short sellers increased positions in GameStop and AMC, indicating expected volatility.

GameStop and AMC, the darlings of the meme stock phenomenon, have experienced remarkable price movements. GameStop’s stock price soared by 126% over the past week, leading to $1.8 billion in losses for short sellers, particularly those caught off guard as the stock hit a crucial price point of $39.70 per share. Similarly, AMC saw an 88% weekly rise, inflicting $157 million in losses on short sellers, triggered at $5.73 per share. Additionally, AMC capitalised on the surge by announcing a $250 million stock sale to bolster its financial position.

According to Victor Ricciardi, a visiting finance professor at Ursinus College and author of “Advanced Introduction to Behavioural Finance,” the rally can be largely attributed to herd mentality. Investors, driven by the fear of missing out and influenced by prominent figures in the social media space, engage in group dynamics that often lead to riskier investment decisions. A notable influencer in this context is Keith Gill, known as Roaring Kitty, who recently made a highly anticipated return to X (formerly Twitter) after a three-year hiatus. With 1.2 million followers, his re-emergence has profoundly impacted the meme stock community, fuelling the recent rally.

Keith Gill’s Return Sparks Meme Stock Frenzy

Roaring Kitty’s return to social media has been pivotal for the meme stock movement. His charismatic presence and investment insights have rallied his extensive follower base, reigniting interest in meme stocks. His influence is evident in the sharp price increases of GameStop and AMC, underscoring the power of social media in contemporary market dynamics.

Despite the severe losses, short sellers have paradoxically increased their positions in these meme stocks. This trend suggests a persistent belief in potential downside risks, possibly setting the stage for continued volatility. The implications of this strategy could mean further dramatic price swings as short sellers brace for possible future downturns.

S&P 500 Expected to Grow 9% in 2024, Rate Cuts Anticipated

The broader U.S. stock market has also been performing robustly, reaching new record highs. The Dow Jones Industrial Average crossed the 40,000 milestone, marking its fifth consecutive week of gains. The S&P 500 and Nasdaq have similarly enjoyed a four-week streak of record highs. This performance is bolstered by strong quarterly results, decelerating inflation data, and optimism about potential interest rate cuts by the Federal Reserve.

Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, provided a positive outlook, highlighting that solid Q1 earnings and guidance underpin the rally. He anticipates a 9% earnings growth for the S&P 500 in 2024, supported by favourable U.S. economic data suggesting a soft landing scenario. Furthermore, market expectations are leaning towards a 70% chance of an interest rate cut by September, according to the CME FedWatch Tool. Federal Reserve officials Christopher Waller and Mary Daly are key figures to watch.

Premarket: GameStop Up 9.4%, AMC Up 5.0%

Premarket trading reflects the ongoing excitement, with Dow e-minis down 31 points (-0.08%), S&P 500 e-minis down 4.25 points (-0.08%), and Nasdaq 100 e-minis down 13.75 points (-0.07%). Individual stocks like Reddit surged by 12.6% due to a new partnership with OpenAI. GameStop and AMC continued their upward trajectory with premarket rises of 9.4% and 5.0%, respectively. These trends suggest that GameStop and AMC are on track to finish the week significantly higher, driven by the renewed enthusiasm from Roaring Kitty’s return.

The meme stock rally, reignited by Roaring Kitty’s return, demonstrates social media’s and group psychology’s profound impact on market dynamics. As GameStop and AMC continue to ride this wave, the market remains vigilant, anticipating further developments and potential volatility. The broader market’s robust performance, supported by positive economic indicators, adds another layer of complexity to this intriguing financial phenomenon.

YOU MAY ALSO LIKE

Stocks

Quick Look: Bilibili Inc. (NASDAQ: BILI) saw an 8.48% rise to $15.61,

Tractable raises $60M to grow in accident - robot recovery

Quick Look: Ray Kurzweil predicts significant lifespan extension and human-AI integration by

Gold

Quick Look: Gold (XAU) reached a record high in May 2024, with

COMMENTS

Leave a Comment

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

User Review
  • Support
    Sending
  • Platform
    Sending
  • Spreads
    Sending
  • Trading Instument
    Sending

BROKER NEWS

Zenfinex Reports Revenue Surge but Faces Operating Losses

London-based broker Zenfinex, now operating as Taurex, has exposed its fiscal year 2023 financial results, which paint a complex picture of its economic situation. Zenfinex’s Fiscal Overview Zenfinex Limited’s revenue hit £848,306, a

BROKER NEWS

Broker News

Zenfinex Reports Revenue Surge but Faces Operating Losses

London-based broker Zenfinex, now operating as Taurex, has exposed its fiscal year 2023 financial results, which paint a complex picture of its economic situation. Zenfinex’s Fiscal Overview Zenfinex Limited’s revenue hit £848,306, a significant