Spring is in the air and the meme stock punters are stirring if recent movements in the GameStop share price are a guide.
GameStop, if you recall, was last year at the hub of a concerted buying campaign by retail investors using the Reddit r/Wallstreet platform to turn the tables on Wall Street funds shorting the video chain.
The share price rocketed by more than 1000% as the hedge funds betting the price would fall rushed to close their positions, causing billions of losses for some holding the short with several smaller funds going under.
The current movement in the GameStop share price is similar according to the watchers of the meme stocks, as they became known.
GameStop shares surged 30% higher at one point yesterday before settling at the end of trading at US$139, up more than 60% over the past week.
Pre-market expectations are for the shares to take off today as well, though there is still a way to go before the US$300 heights of 2021 are reached.
But it resembles a similar share rally in June last year that heralded the chaos that followed when the share price doubled in a month, said commentators.
In line with recent the rise in the share price, activity on Reddit has also surged higher again with FOMO, fear-of-missing-out, potentially a factor in the recent surge
US site Seeking Alpha also suggested a gamma squeeze might be at work, which is when a market maker is covering its position and unlike a short squeeze where a trader or fund is rapidly adjusting its holdings.
Other stocks caught up in last year’s meme stock frenzy, AMC Entertainment, Koss and Blackberry (TSX:BB) have all also rallied strongly over the past week.
Cinema chain and Odeon owner AMC is up 26%, headphones maker Koss 30% and Blackberry (TSX:BB) by 5%.
Aside from the speculation, one bit of concrete news is that GameStop is being sued by its business consultant Boston for non-payment of around US$30mln in fees.
Boston says it spent tens of thousands of hours on a new concept to rejuvenate GameStop, a claim that is rejected by the video chain.
“It is confounding that the high-priced consultants at BCG claim to have delivered hundreds of millions in value for GameStop during a period when share price, sales and debt were at perilous levels,” GameStop said in an emailed statement to Bloomberg.