Meme stocks GameStop, AMC are popping again as speculative trading ramps back up
When you think GameStop mania is a story of the past, meme stocks came back from the dead with a double-digit rally this week as enthusiastic investors piled back into speculative assets with the market near record highs.
GameStop shares rose another 11% on Wednesday, boosting its profit by more than 30% this week. Another Reddit target, AMC Entertainment, increased its morning trade by 12%, pushing its weekly advance to over 50%.
Strategists believe that the recent run-up occurred as these speculative assets and others oversold. Last week, bitcoin suffered a 30% one-day crash that scared many people on Wall Street and the cryptocurrency compensated for some losses this week but trading remains volatile.
Meanwhile, the stock market, which recently returned to near its record levels amid the reopening of optimism, may have sparked another wave of animal spirits and left some investors in the most risky parts of the market Be pulled back
Jeff Kilberg, chief investment officer and portfolio manager at Sanctuary Wealth, said, "I believe the upsurge in these thematic names is a function of two components: the bitcoin pullback and the overshold that currently exists at GME and AMC due to profit taking." Conditions. " .
"I also believe that the confidence of newly injected investors with US equity markets is hovering near all-time highs. High tide lifts all boats," said Kilberg.
In January, GameStop became the center of attention and sent shockwaves to Wall Street. A band of retail traders coordinated trades on Reddit's WallstreetBets Forum and managed to create a massive short squeeze, creating huge pain for short-selling hedge funds in the name.
At the time, merchants targeted names with lower levels of interest, including AMC Entertainment, Blackberry and Bed Bath & Beyond. When such hated stocks suddenly rose in price, short sellers were forced to buy back borrowed shares to close their short positions and cut losses. Forcible purchases from short sellers then intensified the rally even further.
GameStop, a brick and mortar video game retailer, is in the midst of an e-commerce transformation after a monstrous rally this year. Beginning the year below $ 20, the stock peaked at $ 483 per share in late January amid a historical short squeeze. The shares are still up 1,130% in 2021 and last traded around $ 233.