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GameStop, AMC Stocks Soar as Meme Stock Renaissance Continues

Wall Street is feeling déjà vu.

This week, an army of small investors drove up the price of GameStop, the video game retailer whose huge rally in 2021 led to the glory of the stock’s main social media booster (Keith Gill, known as name Roaring Kitty), a Netflix series and a movie, a congressional hearing, an investigation by securities regulators – and considerable losses for those who mistimed the stock’s rapid rise and fall.

GameStop shares jumped more than 60 percent on Tuesday, after gaining more than 70 percent on Monday, adding billions in market value. Shares of movie theater chain AMC Entertainment were also buoyant, and obscure cryptocurrencies named after Roaring Kitty and GameStop posted huge gains.

Retail traders have been boosted by Roaring Kitty’s return to social media after a three-year hiatus. Mr Gill released a cryptic series of video clips from films, TV shows and music videos on Monday night. on his account. He made no mention of GameStop, the company he enthusiastically promoted online, making him the face of the meme stock phenomenon in 2021 and 2022, when shares of struggling stocks like GameStop and AMC suddenly jumped 1,000% or more.

In recent days, investors have stocked up on GameStop “call” options — essentially bets that the stock will continue to rise — according to Steve Sosnick, chief strategist at Interactive Brokers. Aside from Roaring Kitty’s return to social media, the rally wasn’t driven by any obvious news regarding GameStop or AMC. “Given my past experience analyzing periodic episodes of meme stock activity, consider me suspect,” Sosnick wrote in a research note.

The strong rally imposed huge losses on short sellers, who were betting on falling stock prices. GameStop shorts started the week with $392 million in profits so far this year. By Monday’s close, that had turned into $852 million in losses, said Ihor Dusaniwsky, chief executive of S3 Partners, a data firm.

“Short sellers risk finding themselves in a journey fraught with pitfalls and bloodshed,” he added.

According to Bloomberg, only two Wall Street analysts cover GameStop, and their ratings are a “sell” and an “underperform.” The retailer recently laid off staff and a number of executives left. Sales are declining, with annual revenue falling in four of the last five years.

News Source : www.nytimes.com
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