The resurgence of meme stocks, fueled by Keith Gill’s return to social media, has reignited retail investor enthusiasm and led to significant price jumps on GME, AMC, BYON and DJT.
- Keith Gill’s return to social media, with a single post on X/Twitter, sparked a surge in trading for meme stocks like GameStop, AMC, and Beyond during the May 13th session.
- Gill’s mysterious social media activity, including liking a post and posting enigmatic videos, fueled speculation among retail investors, leading to significant price jumps in meme stocks.
- While meme stocks are experiencing a resurgence in bullish sentiment, especially with Gill’s involvement, uncertainties remain regarding the potential for future short squeezes amidst high short-interest levels and market euphoria.
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A single post on X/Twitter was all it took to ignite a surge in trading for meme stock favorites GameStop, AMC, and Beyond (formerly Bed Bath and Beyond) during the May 13th session.
The post in question came from Keith Gill, the central figure of the GameStop stock saga. He is also known as “Roaring Kitty” on his YouTube channel and “DeepF**kingValue” on his Reddit account.
— Roaring Kitty (@TheRoaringKitty) May 13, 2024
Gill played a pivotal role in the movement initiated by retail investors around distressed companies like GameStop in 2020. This led to significant short squeezes on numerous stocks throughout 2021, notably involving GameStop and AMC Entertainment.
Following the legal scrutiny surrounding the GameStop rally and other meme stocks, Gill kept a low profile, with unknown whereabouts and minimal activity on his social media accounts.
However, on May 9th, Gill, under his “Roaring Kitty” persona, liked a post from the Taste of Cinema profile @davidcinema dated February 14th on his X account. This action sparked thousands of theories among AMC and other retail investors, speculating that Gill hinted at something related to the prominent AMC meme stock.
What is the best movie you've ever seen that takes place in real time? pic.twitter.com/LQbZvdvtQF
— Taste of Cinema (@davidcinema) February 14, 2024
However, the climax was yet to unfold. During the trading session on the 13th, “Roaring Kitty” posted several enigmatic videos, including the one below, hinting at his return to social media after nearly three years of silence.
— Roaring Kitty (@TheRoaringKitty) May 13, 2024
The response was explosive. GameStop shares surged by as much as 110% at one point during the trading session, while AMC’s shares jumped by 45%, and Beyond (BYON) — formerly Overstock.com, which acquired the brand rights from the bankrupted Bed Bath & Beyond — saw an 18% increase. Additionally, Trump Media (DJT) stock, also labeled as a meme stock, experienced robust trading, rising by 8% on the same day.
The “meme stock Monday”
With meme stocks rallying significantly and Keith Gill’s return to social media acting as a catalyst, the bullish sentiment among retail investors and traders over these stocks has reached levels reminiscent of those seen in 2021.
S3 Partners analyst Ihor Dusaniwsky examined the short-interest figures for these stocks to elucidate the market dynamics. The analyst specifically pointed out AMC’s figures, revealing that nearly 19% of the company’s float is currently held short. As a result of the company’s price movement, short sellers have already incurred losses of at least $39 million.
Meme Stock Monday! $AMC short interest is $162.5 million, 55.85 million shares shorted, 18.96% SI % Float. We have seen 6.2 million new shares shorted, worth $18 million over the last 30 days. Today's +24% price move has hit shorts with -$39 million in mark-to-market losses. May…
— Ihor Dusaniwsky🇺🇦 (@ihors3) May 13, 2024
Regarding GameStop, Dusaniwsky indicates that approximately 24% of the company’s float is held short. He also highlights that all of the $392 million in profits earned by short sellers up until the trading session on May 13th vanished when the stock surged by almost 100% at one point. This suggests that shorts would incur around $1 billion in mark-to-market losses at the peak of the trading session.
$GME short interest is $1.13 billion, 64.49 million shares shorted, 24.16% SI % Float. We have seen 1.4 million new shares shorted, worth $24 million over the last 30 days. Shorts were up +$392 million in Jan-April mark-to-market profits. But today's +92% price move has slapped…
— Ihor Dusaniwsky🇺🇦 (@ihors3) May 13, 2024
What’s next for GameStop and AMC
Major meme stocks like GameStop and AMC are presently in a different position than 2020 and 2021. During that period, these companies faced significant short-interest and substantial financial challenges amid the COVID-19 pandemic, while the economy received a massive injection of stimulus from the Federal Reserve.
Today, although they still have high short-interest levels, short squeezes may have lower potential. While seeing a jump of 45% or 110% in one trading session is impressive, it’s unlikely (though not impossible) that we’ll witness stock price increases in the triple or quadruple digits within a few days.
When considering other indicators such as cost-to-borrow, GameStop stock shows 8%, which is not low but is far from extremely high. This suggests modest demand from short sellers to borrow the stock. On the other hand, AMC’s cost-to-borrow is only 2.6%, largely due to the substantial dilution of its float. The abundance of AMC shares available for borrowing limits the potential for significant short squeezes.
I believe that further social media interactions and possibly a video appearance by Keith Gill could introduce more volatility for meme stocks, particularly GameStop. AMC, being in a similar position, should also see some benefit. However, all of this remains speculative, particularly amidst the current market euphoria driving toward a bull market. The S&P 500 and Nasdaq-100 are up 10% and 9%, respectively, this year.
Regardless, Gill’s reappearance presents an intriguing opportunity for traders to capitalize on these catalysts until the euphoria subsides. However, timing these trades effectively is akin to making a bet. So, let the Wall Street betting commence once again.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content)
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