WallStreetBets is back after a three year hiatus.
Roaring Kitty Rally
Reddit’s WallStreetBets meme stock investors are back in full force — but their latest ruse isn’t playing out as expected.
Shares of AMC and GameStop shot up several hundred percent earlier this week, driven by excitement over the return of Keith “Roaring Kitty” Gill, who posted a dumb meme on X-formerly-Twitter, the first account activity in three years.
Gill was a key figure in the 2021 coordinated “short squeeze” by Reddit investing enthusiasts, causing the shares of both companies to shoot up and plummet back down, birthing the “meme stock” trend.
The story became so big that it was later turned into a Hollywood movie, a 2023 comedy called “Dumb Money,” starring Paul Dano as Gill.
Unfortunately, what goes up must come down. As expected, shares of both GameStop and AMC have since plummeted this week, with the video game retailer sinking as much as 30 percent on Friday alone.
After all, this wasn’t about the company suddenly turning things around after years of losses — it was a meme stock ruse by a number of redditors who were in it for the “lols.”
Greater Fools
Investors who got bought and then sold at exactly the right moment made a killing — but consequently left anyone who didn’t time things perfectly out to dry.
It’s also an unfortunate situation for GameStop. The mall retailer is doing even worse than investors thought, with the announcement that it was expecting a considerable drop in quarter-over-quarter sales pushing its stock even lower than before WallStreetBets even got involved.
“I’m not seeing anything in the preannouncement that tells me that the business is turning around,” Wedbush managing director Michael Pachter told Yahoo Finance. “But at least they’ll raise enough cash to last them another three or four years if they, in fact, continue to fail and try to find a new strategy.”
GameStop went as far as to warn investors that they “may lose a significant portion of their investments” if shares were to continue to fall.
Meanwhile, embattled movie theater chain AMC managed to raise $250 million in new equity and is still up 50 percent week over week, seemingly coming out of the “frenzy” largely unscathed.
More on meme stocks: Economist Slams Elon Musk for Making Tesla a “Tech-Bubble” Meme Stock
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