In the spring of 2020, a bike passes by an AMC cinema in San Francisco.
Meme stocks have been reintroduced to the menu. AMC Entertainment Holdings, GameStop, and Bed Bath & Beyond all saw their stock prices soar on Monday, reviving the frenzy of buying that pushed them to new highs early last year.
AMC (ticker: AMC) closed at $29.33, up 45 percent, while Hycroft Mining Holding (HYMC) closed at $2.32, up 81 percent.
GameStop (GME) increased by 25% to $189.59, while Bed Bath & Beyond (BBBY) increased by 17% to $26.32.
According to Dow Jones Market Data, the gain in AMC was the greatest daily percentage increase in the movie-theater stock since June 2, when it rose 95 percent. The rise pushed the stock into positive territory for the year, with a 7.9% gain, while it remains 53 percent below its one-year closing high of $62.55 set on June 2.
Meanwhile, GameStop’s good day extends a current winning streak to ten trading sessions, during which the stock has risen 142 percent.
The term “meme stock” dates back to early 2021, when a surge of buying sparked by amateur investors exchanging tips, memes, and inside jokes on Reddit forums pushed certain stocks high enough to drive hedge funds and other institutions that had bet against them to buy. GameStop was the epitome of the meme craze. However, other companies, such as AMC, saw their stock rise as well.
Despite the fact that many analysts and institutions have moved on from such equities after their initial gains last year, AMC and GameStop continue to have a large following.
Given the complexity of social-media chatter, short interest, and options trading activity, it’s a fool’s errand to try to explain meme-stock fluctuations, yet the main meme stocks do frequently trade as a basket. Last week’s rally in GameStop—the stock recently turned positive year to date—could have piqued speculators’ interest in AMC.
Early this month, the movie theatre company startled investors by announcing an investment and a collaboration to help Hycroft Mining, which has gold and silver reserves in Nevada, obtain cash and manage its debt. Hycroft has raised nearly $140 million by selling shares since AMC bought its own interest, according to the Wall Street Journal after the market closed on Friday. More “transformational” deals are in the works, according to AMC CEO Adam Aron, who spoke to Reuters in an interview published on Monday.
Meanwhile, GameStop has benefited from news that Chairman Ryan Cohen purchased 100,000 shares last week. Insider purchases are usually an optimistic indicator since they suggest that executives are willing to put their money where their mouth is. Cohen is also an activist investor at Bed Bath & Beyond, pressing for improvements.
Last week, GameStop directors Larry Cheng and Alan Attal made substantial stock purchases.
Unlike AMC, which appears to be investing the money gained from its meme-stock status in other projects, GameStop has been seeking to transition from a store to a technological firm. In the next months, GameStop wants to develop a nonfungible token marketplace.
Short sellers had borrowed and sold a huge fraction of the shares available for trading, which first drew Reddit traders to both stocks. According to statistics from S3 Partners, 15.33 million GameStop shares were sold short recently, accounting for 24.4 percent of the float. AMC’s short interest is estimated to be 109.15 million shares, or 21.2 percent of the float, according to the short-selling analytics firm.
S3 Director Matthew Unterman told Barron’s, “Our data does not yet indicate a short squeeze on either name.” According to S3 data, shares corresponding to 139 percent of the float at the time were sold short in January 2021, at the peak of GameStop’s rise.