Proactive Investors - A second meme stock craze looked increasingly set in stone by Tuesday morning as GameStop Corp (NYSE:GME) and AMC Entertainment Holdings continued to charge higher.
Roaring Kitty’s return to X with an uncaptioned sketch of a gamer leaning forward in his chair had sparked the resurgence, though a subsequent string of snippets from films and television shows looked to solidify his comeback.
pic.twitter.com/fKbdQct1KL— Roaring Kitty (@TheRoaringKitty) May 13, 2024
Come pre-market trading, GameStop was up 125.5% at US$68.65 after having climbed 74.4% on Monday. Shares had sat at US$17.45 on Friday’s close.
AMC was up 134.9% in pre-market trading too, following a 78.4% gain on Monday, while Robin Hood Markets Inc was among other former meme craze beneficiaries to rise.
Roaring Kitty, also known as former Massachusetts Mutual Life Insurance trader Kieth Gill, had been a key cog in the 2021 meme stock frenzy, where retail traders clubbed together via social media to drive up stocks in a blow to short sellers.
Indeed, some 24% of GameStop’s shares were shorted as of Monday morning, signalling bets against the stock by pessimistic traders.
On Monday’s jump in GameStop, Finalto analyst Neil Wilson explained: “We can assume a fair chunk of the move is short-covering action chasing the initial move up.
“Some hedgies will have had calls on their shorts,” he added.
Roaring Kitty’s initial post to prompt the latest meme stock craze had alluded to a joke among the gamer community signalling things were getting serious.
A further 12 posts, featuring clips from the likes of Marvel’s ‘Avengers’, ‘Pirates of the Caribbean’, ‘Ferris Bueller's Day Off’, ‘Fast and Furious’ and old westerns, appeared to tease further messages to recently inactive meme stockers.
pic.twitter.com/fGJPsi20DI— Roaring Kitty (@TheRoaringKitty) May 13, 2024
“So tell me, what’s become of my ship?” Said on line taken from ‘Pirates of the Caribbean’.
Another sported the line: “Make no mistake, it’s not revenge he’s after. It’s a reckoning.”
pic.twitter.com/fKbdQct1KL— Roaring Kitty (@TheRoaringKitty) May 13, 2024
The latest had been captioned over to read: “It had previously occurred to me that The Kitty had taken the demise of his stock rather lightly.
“For every action, there’s a reaction,” it continued.
Analysts had been quick to note the rally in GameStop was not down to market fundamentals, with Wilson dubbing the retailer’s latest earnings miss as “abysmal”.
“There is no clear driver aside from momentum and social media hype, which can reverse very quickly,” XTB’s Kathleen Brooks had warned.
Wilson noted that retail investors appeared to be “becoming more bullish again” on the back of the latest craze, reiterating that there was a lack of fundamentals driving up the stocks, but rather just social media hype.
“I think it’s way too easy to read too much into this move, but it’s not stopping just yet,” he added.