GameStop soars 33% and is halted; AMC surges. Are the meme stocks back?
The two meme stocks were among the top market gainers Thursday morning and leading the discussion on Reddit’s WallStreetBets, where the phenomenon began.
Shares of downtrodden meme stocks GameStop (GME) and AMC Entertainment (AMC) jumped higher Thursday morning in unusual trading, as mentions of their names are among the most-mentioned tickers on Reddit, according to QuiverQuant data.
Discussion of these stocks in r/wallstreetbets, also known as WallStreetBets or WSB, as been picking up over the last 24 hours. That’s the stock discussion subreddit responsible for rallying traders to load into heavily shorted stocks like GameStop and AMC last year that launched a notorious short squeeze. Prices soared, then plunged.
Shares of GameStop rocketed as much as 33% in the first few minutes of Thursday’s trading session, triggering the circuit breaker that momentarily halted the stock. The stock has been halted at least four times for volatility since the market opened.
Meanwhile, shares of AMC soared 32%. They have since backed off to gains of around 10% and 6% respectively.
What happened?
Shares of the two most prominent meme stocks, GameStop and AMC, surged on little news other than their names trending on Reddit — which has proven enough to move a stock.
Data from analytics company QuiverQuant shows mentions of GameStop on the WallStreetBets discussion board exploding early Thursday morning, which could have driven the stock’s volatile trading when the market opened.
The eight most-mentioned ticker symbols on the board over the last 24 hours as of Thursday at 11:29 a.m. ET are:
| Stock | # of mentions | % change |
|---|---|---|
| SPDR S&P 500 ETF (SPY) | 630 | -1.4% |
| GameStop (GME) | 598 | 312.4% |
| Tesla (TSLA) | 523 | 215.1% |
| Rivian (RIVN) | 310 | 282.7% |
| Disney (DIS) | 305 | 510% |
| Apple (AAPL) | 286 | 354% |
| AMC Entertainment (AMC) | 187 | 179.1% |
| Coinbase Global (COIN) | 171 | -61.3% |
Other than heightened Reddit discussion, we aren’t seeing any news that could be driving the gains in GameStop and AMC.
Now what?
Even with Thursday’s rebound, the pair is down more than 80% from 2021 highs.
On Monday, AMC reported first-quarter revenues that outpaced Wall Street’s expectations. Revenue grew 430% to $785.7 million for the quarter and a narrower year-over-year loss, as the company continues to recover from the hit it took during the pandemic.
Despite the strong quarter, MKM Partners analyst Eric Handler reiterated his sell rating and $1 stock price target, saying the stock’s current valuation is still too high.
“[W]e remain concerned about the slower-than-anticipated pace of the theatrical industry’s overall recovery, most notable a 30% decrease in content volume attributed to the lack of mid-level movies,” Handler wrote in a note to clients, according to MarketWatch. “In addition, specific to AMC, it could take many years for the company to grow into its capital structure, which has seen a 400% increase in shares outstanding since the start of the pandemic along with its sizable $5.57 [billion] of debt.”
GameStop is expected to report first-quarter financials in early June.
While these stocks may never return to their 2021 highs, investors shouldn’t count out more days of explosive volatility. Whether they can produce steady growth remains to be seen. Investors who bought near their peaks and are sitting on big losses can only hope so.
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