New York, USA – GameStop stock saw a significant surge in trading on Monday morning following a post by Reddit user Keith Gill on his Roaring Kitty X account, marking his return after a hiatus since 2021. The rally extended to other meme stocks, although it had minimal impact on the major U.S. indexes.
Gill gained prominence for his bullish research and publicized bets on GameStop stock amidst predictions of its decline by Wall Street in 2020 and 2021. In his recent post, he shared a cartoon depiction of a man leaning forward in a red chair, symbolizing a shift towards a more serious approach in investing.
During morning trading, GameStop stock experienced nearly a 100% increase, reaching $34.87, before facing a decline around 10 a.m. ET. Meanwhile, AMC Entertainment stock surged over 11% and KOSS stock rose by 35%. These movements are reminiscent of the frenzied trading witnessed in meme stocks driven by social media chatter, particularly on platforms like Reddit.
The resurgence of meme stocks has occurred against a backdrop of near-zero interest rates that have fueled speculative trading behavior. However, concerns have emerged as the Federal Reserve began hiking interest rates, raising worries about the sustainability of the market’s rally and the potential for excessive speculation.
Despite the excitement surrounding meme stocks, some investors remain cautious. Paul Hickey, co-founder of Bespoke Investment Group, highlighted the isolated nature of the GameStop situation, suggesting it may not reflect broader market sentiment. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all saw modest gains on Monday, indicating a mixed sentiment among investors.
As GameStop’s stock price surged to $36.70, short sellers found themselves at a significant loss of $1.286 billion, based on data from Ortex Media. The evolving dynamics of meme stocks continue to captivate market participants, prompting discussions about the implications of such speculative trading activities on the overall financial landscape.