GameStop’s shares skyrocket over 2x on social media meme

May 14, 2024 (MLN): GameStop Corp. shares surged as speculation swirled around a return to social media by Keith Gill, who drove the meme-stock mania of 2021 under the moniker “Roaring Kitty”, as Bloomberg reported.

The account’s post on X showed a man leaning forward with what looked like a gaming controller, which some traders interpreted to mean that Gill is coming back into action.

More than 175 million shares changed hands, almost 30 times the one-year average. Trading was halted for volatility nine times within the opening 90 minutes of trading yesterday.

Shares rose as much as 119% Monday. They closed higher by 74% at $30.45.

The post had attracted more than 12m views in the hours since its publication, Gill posted on X again at 08:00pm PST on Monday, this time a short video clip stating “Fine, I’ll do it myself.”

The reaction to Gill’s initial post shows shades of the original 2021 mania, with chatter across Reddit’s WallStreetBets and activity on StockTwits sparking a rush of retail trader buying.

GameStop ripped off a three-week rally in the lead up to Monday’s pop, its longest such winning streak this year as shares soared 68% over that stretch as of Friday’s close.

Gill, whose account has long been dormant, shot to fame in 2021 by rallying day traders on Reddit in an effort to squeeze GameStop short sellers.

The stock famously soared more than 2,000% in early 2021, bringing the meme-stock frenzy into the broader public consciousness.

When adjusting for a stock split, the shares peaked at $86.88 near the end of that month before crashing about 88% in three weeks.

It is worth noting that shares have lost nearly three-quarters of their value from a January 2021 peak when so-called Reddit Raiders flocked to the stock. It’d need to more than quadruple from Monday’s levels to recoup all of their losses.

GameStop is expected to report quarterly results next month before an annual shareholder meeting.

Analysts have long warned that GameStop was detached from fundamental values as it carries a $9.3 billion market capitalization.

The company reported just $6.7m in net income for 2023, meaning it trades at a price-to-earnings multiple of more than 1,000.

Meanwhile, AMC Entertainment Holdings Inc. — another stock favored by retail traders — jumped as much as 102%.

The stock is down more than 99% since its 2021 peak, while GameStop shares have lost more than 60% of their value since then.

The flurry of activity broadened from former darlings to newer companies that have taken the meme stock baton like BlackBerry Ltd. and Trump Media & Technology Group Corp.

The most-hated stocks tracked by a Goldman Sachs Group Inc. has jumped 8.7% in the best day since November 2022.

A separate gauge of money-losing technology companies tracked by Goldman Sachs jumped 4.5% on Monday, outperforming the Nasdaq 100 Index by the most since December.

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