Wall Street is feeling meme deja vu.
This week, an army of small investors is driving up the stock price of video game retailer GameStop. GameStop's big 2021 rally was fueled by the stock's social media-savvy mainstay (Keith Gill, aka Roaring Kitty), the Netflix series, a movie, Congressional hearings, investigations by securities regulators, and the stock's Those who mistime the sudden rise and fall will incur huge losses.
GameStop stock rose more than 60% on Tuesday after rising more than 70% on Monday, adding billions of dollars to its market capitalization. Shares of movie theater chain AMC Entertainment performed similarly well, and an obscure cryptocurrency named after Roaring Kitty and GameStop also posted big gains.
Retail traders are inspired by Roaring Kitty's return to social media after a three-year hiatus. Mr. Gill posted a series of cryptic video clips from movies, TV shows and music videos on Monday night. on his X account. He made no mention of GameStop, the company he had been promoting so passionately online and was the face of the meme stock phenomenon of 2021 and 2022, when the stock prices of battered stocks like GameStop and AMC suddenly soared more than 1,000 percent. Ta.
Steve Sosnick, chief strategist at Interactive Brokers, said investors have been betting on GameStop “call” options in recent days, or bets that the stock price will continue to rise, said Steve Sosnick, chief strategist at Interactive Brokers. Other than Roaring Kitty's return to social media, the rally wasn't driven by any obvious news about GameStop or AMC. “Given my past experience analyzing periodic occurrences of meme stock activity, I would consider it suspicious,” Sosnick wrote in his research notes.
The rapid rise has caused huge losses for short sellers who bet on the stock's fall. GameStop shorts started the week with $392 million in profits so far this year. By Monday's close, losses had reached $852 million, said Ihor Dusaniowski, managing director of data firm S3 Partners.
“Short sellers could be in for a bumpy and bloody journey,” he added.
According to Bloomberg, only two Wall Street analysts cover GameStop, and their ratings are “sell” and “underperform.” The retailer recently laid off staff and a number of executives left. Sales have been sluggish, with annual revenue declining in four of the past five years.