GameStop, AMC Stocks Surge Another 100% As Meme Stock Rally Accelerates

GameStop and AMC stocks surge 100%, fueled by an accelerating meme stock rally. Discover the latest updates on this financial phenomenon.

The meme stock mania has reignited, with shares of retail investor favorites GameStop and AMC exploding to their highest levels of 2024. The rally, driven largely by social media hype, has seen GameStop’s stock skyrocket as much as 112% and AMC’s stock soar up to 129% shortly after market open on Tuesday, building on both stocks’ roughly 75% gains during Monday trading.

Retail Investors Fuel the Rally

The meme stock rally was largely driven by retail investors congregating on forums like Reddit’s WallStreetBets. The movement was reignited by a series of posts on X from “Roaring Kitty,” the account belonging to Keith Gill, who became the mascot of the 2021 meme stock mania. GameStop and AMC remain heavily shorted stocks, with 21% of outstanding AMC shares and 24% of GameStop shares being shorted, compared to the 5% and 13% short interest of even heavily tumultuous S&P 500 companies Warner Bros. Discovery and Paramount Global.

According to data firm S3 Partners, GameStop short sellers recorded another $1.36 billion in mark-to-market losses as of midday Tuesday, bringing their total losses for the week to nearly $2.2 billion. AMC shorts suffered $244 million in mark-to-market losses as of midday Tuesday, after losing around $127 million on Monday.

AMC announced on Tuesday that it raised approximately $250 million by issuing 72.5 million shares at an average price of $3.45 per share. Citi lifted its price target on AMC stock to $3.20 from $3.10, noting that the company’s Q1 revenue and adjusted EBITDA were in line with its preliminary results from May 8.

Other Meme Stocks Join the Rally

The meme stock rally extended to other companies as well, with shares of Koss gaining more than 25%, BlackBerry shares rising 8.4%, and Virgin Galactic stock advancing 12.5% on Tuesday. Companies such as Beyond Meat, Rent The Runway, and SunPower also experienced unusual activity.

The entire short squeeze saga was detailed in the movie “Dumb Money.” The meme stock phenomenon first gained traction in 2021 when individual investors coordinated a buying spree in GameStop shares using online message boards, catching short sellers by surprise and forcing them to buy the stock to cover their positions, further fueling the stock’s gains.

Shares of GameStop finished the day 60% higher after more than doubling at one point earlier, while AMC shares ended the session up 32% after gaining over 130% at its peak.

Fundamentals Remain Weak Despite Rally

Despite the recent rally, GameStop reported lower fourth-quarter revenue amid rising competition from e-commerce-based competitors and announced job cuts in late March to reduce costs. The rally appears to be driven primarily by retail investor enthusiasm rather than fundamental business improvements.

Neil Wilson, chief market analyst at Finalto, noted, “It looks like retail investors are becoming more bullish again and willing to take on more risk. There is no fundamental reason for the move as such – GME’s last earnings report was abysmal.”

The meme stock rally has tested the principle that publicly traded assets are simply worth as much as the market will pay for them, as there is no concrete reason that stocks linked to companies mired in long-term cyclical declines like GameStop should triple in value out of nowhere.