Reddit back at AMC and Gamestop? AMC And GameStop Skyrocket As Reddit Traders Rally Around Meme Stocks Anew
TOPLINE Shares of movie theater chain AMC Entertainment and brick-and-mortar retailer GameStop, two of the top meme stocks embroiled in a late-January trading frenzy, have posted a stunning run this month, surging nearly 50% and 35%, respectively, as Reddit traders continue to plow into the highly shorted stocks despite still-bearish forecasts from analysts—one of several signs that risky market activity is still running full force.
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People walk outside the AMC Empire 25 movie theater in Times Square, New York City. GETTY
As of 3:15 p.m. EDT, AMC shares were soaring 10% Monday to more than $15 apiece, lifting the stock to its highest level since a closing high this year of $19.90 on January 27—right before a slew of meme stocks started crashing more than 70% in a matter of days.
Signaling that frenzied trading once again fueled a short squeeze, AMC short interest rose to a record high in mid-April before falling by month's end as trading volume and prices surged well into this month, likely forcing the institutional investors betting on a price decline to cut their losses by buying back shares at higher prices.
n the other hand, were surging nearly 17% to roughly $210, just under the stock's latest highs in March after the firm tapped Chewy founder Ryan Cohen to head up its digital transformation and serve as board chair.
In hundreds of thousands of comments over the past few days, Reddit traders have celebrated the rallies, with one user garnering 4,000 upvotes Tuesday by reposting a tweet reading: "Wall Street clearly underestimated a generation raised on highly coordinated Friday night World of Warcraft raids."
Despite the celebratory retail traders, analysts are still overwhelmingly bearish on shares: Citi's Jason Bazinet reiterated a sell rating for AMC Thursday and issued a price target of just $3.70, saying the company's high debt load adds to the risk of its uncertain recovery from the pandemic, as more studios forgo theater releases in favor of at-home streaming.
AMC shares hold an average one-year price target of about $5.11 on Wall Street, giving the stock nearly 63% downside from current levels, according to financial analytics site Ortex, while GameStop's average price target of $48.17 sits more than 75% below current levels.
CRUCIAL QUOTE
“When looking at the comments themselves, there’s a clear desire for a short squeeze either today or very soon," Travis Rehl, the founder of social media analytics platform HypeEquity told Marketwatch last week of the booming social media activity rallying around GameStop and AMC shares.