Your MoneyStocktake

Meme stock mania is unlikely to last

Shares in Gamestop and cinema chain AMC almost quadruple after Roaring Kitty tweets

Shares in Gamestop almost quadrupled as Keith Gill, better known as Roaring Kitty, reappeared on social media for the first time in three years. Photograph: Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

Proinsias O'Mahony's face
Proinsias O'Mahony
Sat May 18 2024 - 06:00

Meme stock mania re-erupted with the return of Gamestop investor Keith Gill (or Roaring Kitty, as he is better known).

Returning to X after a three-year silence, a few cryptic tweets from Gill were all it took to send meme stock prices soaring. Gamestop shares almost quadrupled, as did US cinema chain AMC.

Still, the gains pale in comparison to 2021′s mania, when Gamestop shares soared from around $4 to $120 in a few weeks. Then, the stock barely paused for breath, but the bloodshed that followed Gamestop’s intraday high on Tuesday suggests the party will be shorter-lived on this occasion.

This year is not 2021. Then, stimulus cheques and pandemic lockdowns fuelled a surge of amateur traders with extra cash. Interest rates have gone from zero to heights unseen in 22 years.

READ MORE

This difference is evident in Vanda Research data showing Gamestop’s net retail flows were almost six times higher during 2021′s peak than they were on Monday.

[ Dumb Money: GameStop short-squeeze film will have you shouting ‘Sell, for God’s sake!’ at the screen ]

[ Truth Social valued on virtual hot air, not fundamentals ]

Additionally, hedge funds are much better prepared than they were in the unprecedented days of 2021. Retail traders, too, know the party won’t last forever, and that booking quick profits in an unsustainable advance makes more sense than adding to risky bets.

We may see more meme stock madness in coming weeks, but a repeat of 2021′s dramatics is unlikely.

GamestopAMC