GameStop and AMC shares soar again as traders pounce on meme stocks
Sign up now: Get ST's newsletters delivered to your inbox
GameStop shares soared 60 per cent on May 14, after surging 70 per cent on May 13.
PHOTO: REUTERS
Follow topic:
New York - Meme stock traders again piled into shares of GameStop and AMC Entertainment Holdings in a revival of the retail trading frenzy that rocked markets during the Covid-19 pandemic.
The video game retailer’s stock jumped 60 per cent after rising as much as 113 per cent on May 14, while the beleaguered movie theatre chain’s shares were up 32 per cent. The swings triggered multiple halts in the trading of each stock throughout the day. GameStop has picked up more than US$11 billion (S$14.9 billion) in market value in May as its stock has soared, while AMC has gained some US$1.2 billion.
The latest rally erupted on May 13 following the return to social media of Mr Keith Gill, who drove the meme stock mania of 2021 under the moniker Roaring Kitty. Mr Gill shot to fame that year by rallying day traders on Reddit in an effort to squeeze GameStop short-sellers.
AMC on May 14 announced it had completed a previously announced at-the-market offering of shares, raising about US$250 million in total as it sold 72.5 million shares for an average price of US$3.45. AMC’s stock closed at US$6.85 on May 14.
AMC’s bonds received a big boost from the stock rally too. Its notes were the biggest gainers in high-yield trading on May 14, with its 10 per cent bond due 2026 rising as much as 11.25 cents on the dollar to 87 cents, according to Trace pricing data.
Both stocks rallied more than 70 per cent on May 13 as GameStop options volume surged to the highest level since July 2022. By the morning of May 14, GameStop had blown through the most-traded strikes, and traders continued to pump options volumes well above the average over the past month.
Even so, the activity falls far short of the 2021 flurry. The number of GameStop call options that traded hands on May 13 was just 10 per cent of the volume that moved at the peak of the meme stock craze three years ago.
Trading volume has soared this week for both of the stocks, with hundreds of millions of shares exchanging hands over the past two days. However, the value of shares trading hands for both stocks remained far below the levels seen three years ago.
Even with the rapid rallies – GameStop’s stock price has more than quadrupled in May, and AMC’s has tripled – each remained below the heights they reached during the 2021 meme stock heyday.
Traders quickly looked to stocks beyond GameStop and AMC that could move in sympathy, lifting a large swathe of names with high short interest on May 13. That trend continued on May 14 as SunPower shares jumped by a record, while BlackBerry, Lucid Group and Virgin Galactic Holdings also rallied.
While the surge during the height of the pandemic included a staunch commitment by retail traders to “hodl” – or hold on for dear life – they are now more experienced, said Tuttle Capital Management chief executive Matthew Tuttle.
“The people trading this stuff now are a lot more seasoned and understand where to get in generally speaking and where to get out,” he said. BLOOMBERG
