GameStop, AMC stocks see 100% swings as meme fever returns


  • GME, AMC meme stocks gain more than 100% in premarket.
  • Prices descend to +50% to +80% gains in regular market on Tuesday.
  • Keith Gill continues to post video clips on social media, hyping up his retail followers.
  • GameStop recorded more than 17 times the usual volume on Monday.

 

GameStop (GME) and AMC Entertainment (AMC) are at it again on Tuesday. Both stocks more than doubled in Tuesday’s premarket as more retail investors piled into 2021’s favorite meme stocks. 

Shares of both companies have since receded to between 50% and 80% gains in the regular session, due in part to a number of exchange halts resulting from extremely volatile price action. In the first half hour of the regular session, for instance, GME stock plunged rather suddenly from $64 to $45.

The broader US market is advancing gingerly on Tuesday morning despite April’s US Producer Price Index printing slightly higher than expected at 0.5% MoM. Economists had averaged a 0.3% forecast prior to the release.

GameStop & AMC stock news

Very little of substance has happened since Monday’s incredible gains for both meme stocks. GameStop gained 74.4% on Monday with more than 17 times the usual level of volume. AMC stock gained slightly more on Monday at 78.4%.

The only news of note is that since Keith Gill reignited the meme stock fury over the weekend by posting a meme. Gill was the adopted leader of the meme stock craze in 2021 that launched first GME and then AMC into a series of historic short squeezes that eventually caused a hedge fund short-seller to close its doors.

Since Sunday’s return from a self-imposed hiatus on social media, Gill has been posting hype clips from various films and television shows, including Breaking Bad, Snatch, Gangs of New York, Peaky Blinders, Tombstone and The Good, the Bad and the Ugly

Meme stocks FAQs

Meme stocks are stocks favored by retail traders – but not by professional or institutional traders – that grow popular through its backers publishing memes on social media websites to win converts. Images or GIFs are typically used to transmit some type of excitement, committment or comedy regarding investment in the stock. These stocks normally are beaten down names that appear to have an uncertain or dour future based on falling sales figures or rising losses. Interest in these names normally comes from either belief in a turnaround story or its heavy short ratio.

Online investing forums like Reddit’s r/WallStreetBets are known to be breeding grounds for meme stocks. Normally, some small group of posters begin making memes of a stock they are buying. If the argument behind it is cogent or even just funny, the memes may provoke other retail investors to jump aboard. Interestingly, the merits of a stock are normally immaterial to it becoming a popular meme stock other than it being abandoned by the wider market and thus cheap. Stocks with high short ratios are usually likely to become meme stocks, because the nature of the argument for investing in the stock is that it can be the subject of a short squeeze.

A short squeeze is when investors swiftly buy up the shares of a heavily-shorted stock. Because the stock is heavily shorted, there is a dearth of available shares to purchase. This allows smaller volumes of buying to push the stock’s price up more easily. Since the share price suddenly rises, short-sellers need to purchase the stock to close out their short positions. This rapid buying and closing of short positions produces an unusually low level of supply that causes the price of the stock to rise rapidly. This type of short squeeze was the result of the first meme stock craze regarding GameStop.

Besides GameStop – the ur-meme stock – there have been a number of other meme stocks. Two of the most popular are AMC Entertainment and Bed Bath & Beyond. AMC CEO Adam Aron used the popularity of AMC shares among the retail class to effect a secondary offering that raised enough money to stave off bankruptcy during the 2020-2021 pandemic. Bed Bath & Beyond saw a flurry of volatile trading but eventually went bankrupt in April 2023.

GameStop & AMC stock charts

GameStop stock has already lifted momentarily above former resistance circa November 2021 surrounding $63. That break tells us that there’s a very real chance that bulls make it to the next point of possibility in the $86 to $87 range.

Support, if there is any, looks to be somewhere in the high $40s based on previous upward lunges during the Spring and Summer of 2022.

GME daily stock chart

 

AMC stock has formed a new range high on Tuesday with a push above the $11.17 high from October and November of last year. Above there is a demand window ranging from $13.50 to $13.90. 

Then there are the two sides of the gap down from August 2023 at $16.60 and $19.40. Without any fundamental reasons for buying other than memes, expect bulls to target several of these levels.

AMC daily stock chart

 

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