GameStop, AMC surge as return of ‘Roaring Kitty’ rekindles meme stock mania
2024.05.14 11:02
By Medha Singh
(Reuters) -Retail darlings GameStop (NYSE:) and AMC surged on Tuesday after posts from “Roaring Kitty” Keith Gill raised chatter about the return of the central figure behind the 2021 meme stock frenzy, setting off a rally in the shares.
The stocks more than doubled before the bell and were set to extend gains from the previous session after Gill shared a meme and more than 10 clips from movies, including “X-Men Origins: Wolverine”, “The Avengers” and 1993 Western “Tombstone”.
Even though the posts did not mention company names, shares of video game retailer GameStop and AMC, the world’s largest theatre chain, were the most-traded stocks by retail investors on Monday, J.P.Morgan data showed.
That was mainly because Gill, who is returning to social media platform X after a gap of nearly three years, is credited with sparking the so-called Reddit rally in January 2021 with bullish calls on video game retailer GameStop.
“The fact that Roaring Kitty is back should be totally meaningless to the stock market (but) the fact that it isn’t is fascinating,” said Matthew Tuttle, CEO of Tuttle Capital Management.
“Meme stocks coming back juices the entire market of the stocks that a lot of retail guys like to trade and provides them opportunities to make money outside of buy and hold.”
GameStop surged as much as 118% on Monday and closed at a two-year high. Its market capitalization jumped nearly $4 billion to $9.32 billion.
Short sellers of the stock were set to lose $1.2 billion on paper on Tuesday, slightly more than Monday’s losses, analytics firm Ortex Technologies said.
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AMC surged 78% to $5.19 and more than doubled from a record low hit in mid-April.
The frenzy also spread to shares of micro-cap companies.
Headphones maker Koss, U.S.-listed shares of BlackBerry (NYSE:) and food storage container company Tupperware (NYSE:) rose between 34% and 15% on Tuesday.
Shares of Reddit rose 3.3%. The social media firm was used by retail investors in 2021 to coordinate and target highly shorted stocks, culminating into a Wall Street versus Main Street battle.
Analysts said the speculative trades are unlikely to last long as the economic backdrop of hot inflation and high interest rates is in stark contrast to the era of cheap money and pandemic savings in 2021.
“This meme rally maybe rhymes with 2021 but is unlikely a repeat,” said Ben Laidler, global markets strategist at digital brokerage eToro.
Retail investor-focused brokerage Robinhood (NASDAQ:), which made zero-commission trades mainstream, gained 1.5%.
