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The start of this year was one of the wildest times the stock market has ever seen. By the end of January, video game retailer GameStop (GME) was trading at nearly 30 times its $17.25 valuation, shares of software company Blackberry (BB) hit its highest in a decade, and stocks of movie theatre chain AMC (AMC) surged nearly 840%.
The short squeezes driven by amateur Reddit investors started a revolution, but investors could only ride the volatile rollercoaster for so long before it crashed.
But now, five months later, the meme stocks have made an unexpected return. On Tuesday, GameStop rose 12% to $249.02, Blackberry bounced 15% to $11.56, its highest in over two months, and AMC railled to $32.04, up a massive 23%.
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AMC’s significant surge comes despite the company’s substantial sell off from Mudrick Capital Management, who bought $230.5 million of shares before selling for a profit on Tuesday, calling the stock overvalued.
In a statement, AMC Chief Executive Officer Adam Aron, said the deal with Mudrick will “allow us to be aggressive in going after the most valuable theater assets, as well as to make other strategic investments in our business and to pursue deleveraging opportunities.”
The news of the sell off didn’t go down well with the Reddit community, with one user, numan_42_, saying, “IT SEEMS LIKE MUDRICK SOLD, THEY WERE DEFF A SHILL.” But, as shares continued to rise, it seems that the news spurred the community to do what they do best—HODL.
BlackBerry is back
One of the biggest recent comebacks has been from BlackBerry. The company’s recent rise in shares had day traders trying to send the stock to the moon on r/WallStreetBets. One Redditor commented, “Is it finally BB’s turn?” While another said, “Come on BB!!! $7 more dollars till I break even!!!” Others were pushing for the share to reach $10, “Break $10, and then you may rest.”
The company known for its now obsolete smartphones, that has since pivoted to focus on cybersecurity and software for the automotive industry, is expected to hit revenue of $824 million in the January 2022 fiscal year, a decline in 10% from the year prior.
Gill for GameStop
GameStop was also trading higher Tuesday as retail traders banded together to hype up the stock on social media. One of them was the man who started it all, Keith Gill, aka Roaring Kitty. The original leader behind the GameStop saga tweeted for the first time since April 16, likely contributing to GameStop’s rising share price.
— Roaring Kitty (@TheRoaringKitty) June 2, 2021
Gill’s blasted out GIFs at 10 am, 1 pm, and 3 pm of cats, John Wick, and the Rorschach character from the graphic novel “Watchmen”. The sudden activity on social media did not go unnoticed by the leader’s army of followers, with shares of GME rising 12%.
While meme stocks continue to gain momentum, they do so based purely on hype and market sentiment, rather than strong fundamental analysis. This means they continue to be highly volatile and risky to trade. Investors should always remember to only invest what they can afford to lose.
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