GameStop Corp (NYSE:GME) soared as much as 110% on Monday before being temporarily halted from trading after the return of meme stock trader Roaring Kitty to social media.
Given the brick and mortar video game retailer’s poor performance recently, analysts were left mulling whether the rally may mark the return of the meme stock frenzy.
“There has been no direct catalyst for this move,” XTB’s Kathleen Brooks commented, recent results were "horrible,” she added, pointing with fourth-quarter firuges having missed expectations.
“This suggests that the meme stock craze could be back.”
Monday’s rally was sparked by a post from former Massachusetts Mutual Life Insurance trader Keith Gill on X through his account ‘Roaring Kitty’.
Gill himself had been credited with sparking the 2021 meme rally, which saw retail traders club together via social media and drive up GameStop shares to hit short sellers.
Shares had climbed from as low as US$3 to US$120 in a matter of months as a result, prompting hedge funds, such as Melvin Capital, to sell their positions against GameStop at a loss.
Gill’s first post, of a sketched gamer leaning forward to signal things were getting serious, was followed by a string of subsequent videos, sending GameStop shares 63.2% higher.
In what appeared to be teasing messages, he posted excerpts from Marvel films and a clip from television show ‘Breaking Bad’, including the line: “We’re done when I say we’re done.”
— Roaring Kitty (@TheRoaringKitty) May 13, 2024
Fellow former meme stocks were also dragged up by the comments, with AMC Entertainment Holdings (NYSE:AMC) Inc climbing 33.7% on Monday.
Though Gill is yet to publicly comment on his return to social media, this comes as short positions against GameStop have climbed to account for 24% of its issued stock.
Brooks noted traders may well approach the latest craze with “a little more caution”, given both GameStop and AMC sit well off their post-pandemic highs.
“This is one of the key risks of trading meme stocks - there is no clear driver aside from momentum and social media hype, which can reverse very quickly,” she said.