GameStop Stock Soars Nearly 100% as Meme Stocks Make a Comeback
GameStop (GME) shares surged almost 100% on Tuesday before settling down, following a 74% jump on Monday.
The dramatic rise on Monday, where the stock climbed as much as 110% and faced multiple trading halts due to volatility, was sparked by the return of Keith Gill, also known as "Roaring Kitty." Gill's bullish stance on GameStop had previously ignited the 2021 meme stock rally.
Before this recent surge, GameStop's stock had been flat for the year but had increased about 60% in the past month. With Tuesday's pre-market gains, the stock is now up over 180% for the month. AMC Entertainment (AMC) also saw significant gains during this period.
On Tuesday, AMC's stock rose about 120% in early trading. According to an SEC filing, AMC issued around 72.5 million new shares, raising about $250 million.
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Other stocks with high short interest also rallied on Tuesday. SunPower (SPWR) went up 73%, Beyond Meat (BYND) rose 12%, and The Children's Place (PLCE) increased nearly 10%.
Nicholas Colas, co-founder of DataTrek Research, noted in a client memo that the recent trading activity resembles the early 2021 meme stock surge. Back then, GameStop's stock soared 1,500% in January before losing most of those gains. Despite the previous losses, short interest in GameStop remains high. Data from S3 Partners showed that 24% of GameStop's float was sold short as of Monday.
Ihor Dusaniwsky, managing director of S3 Partners, reported that GameStop short sellers had lost over $1.3 billion in May following Monday's rally, with Tuesday's spike adding to these losses.
Colas explained that traders shorting a stock with such aggressive rallies often have no choice but to close their positions, regardless of the price. He also noted the potential for retail traders to revive the 2021 frenzy, which had gained national attention and attracted many new investors during the pandemic lockdowns.
Tom Sosnoff, CEO of the trading platform tastylive, commented that the current rally differs from the 2021 surge, which he described as a pivotal moment that brought millions back into the market. However, YouTuber Matt Kohrs, who has previously invested in GameStop and AMC, believes the core conflict of "the little guy vs. the big guy" from the 2021 short squeezes remains relevant today. He argued that GameStop symbolizes a movement against a system perceived to favor the elite.
Kohrs added, "The only real change now is that people are not stuck at home anymore," reflecting on the different social context compared to the original meme stock boom.
Also Read: GameStop Shuts Down NFT Marketplace: Is the Crypto Buzz Fading?
