GameStop and AMC stock prices are falling again.
This is a story about not dying. Meme stock guru Keith Gill, also known as “Roaring Kitty,” posted on social media again, sending the brief squeeze crowd into their seats. However, each new price pump appears to have less power and last less time.
There’s no denying that the story behind the 2021 short-term rally in AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) stocks is fascinating, even if it’s not actually investable. For a while, it seemed like retail traders might finally gain the upper hand over wealthy short sellers.
In retrospect, everyone can now see that retail traders who jump on the bandwagon will end up holding the bag solely with GME and AMC stocks. But some investors may wonder whether this year’s memestock revival will have a happier ending.
Keep in mind the famous last words of many failed traders and investors: “This time it’s different.”
Another week, another pump.
To recap, Gill re-emerged on social media in mid-May after a long hiatus. His X post was cryptic, containing only pictures and no text.
Apparently, it was enough to spark massive short selling in GameStop, AMC Entertainment, and a handful of other meme kings of 2021. But to actually profit from a rise in stock prices, you needed some luck on the orders of lottery winners. The stock price soared and then plummeted within a few days.
Aside from a few false starts here and there, the meme stock scene has remained drama-free since mid-May. But like Jason friday the 13th In the film, Gill never seems to disappear permanently.
Again, this This time it was a reverse card from the Uno card game.
Around the same time, Gill posted a screenshot to Reddit showing his GME stock and options holdings. Here is another user, X, reposting that image, marked as a reply to Gill’s post:
There is no way to confirm whether Gill actually holds 5 million shares of GameStop stock and 120,000 GME call options, or whether he just made $2.65 million in one day from his GameStop stock position. then <으르렁거리는 고양이>I’m just curious what you were trying to say.
Rise and inevitable fall
Gill’s second appearance on social media almost certainly resulted in GME stock rising 78.6% in pre-market trading on June 3. Meanwhile, AMC shares were up 23.3% in pre-market hours.
The stock certainly didn’t turn red that day, but it closed well below where it opened. On June 4th, GME and AMC stocks started off with a weak rally and then completely flattened out.
So meme stocks appear to have diminishing returns for passionate short-term traders. The mid-May rally lasted longer, rose much higher, and attracted much more attention in the financial media.
For some lesser-known meme stocks, the story is even worse. A textbook example is Faraday Future Intelligent Electric (NASDAQ:FFIE) stock, which has lower price and volume than GameStop and AMC Entertainment stocks.
As a result, FFIE stock may be more vulnerable to steep and uncontrollable declines. In fact, FFIE stock caught up in the most recent meme-stock rally, only to completely collapse on Tuesday.
However, Faraday Future Intelligent Electric is an electric vehicle (EV) company. Fundamentals and finances aren’t a high priority when meme kings peddle get-rich-quick schemes for amateur traders, but they did issue a “continuing concern” warning not long ago.
Warning some investors about meme stocks may be futile, but you can’t blame Tradier CEO Dan Raju.
“What happens in meme rallies like the one we see with GameStop is that baseless speculation is misconstrued as a strategy by some retail investors,” Raju explained to MarketWatch.
In a similar vein, Steve Sosnick, chief market strategist at Interactive Brokers, took a cautious tone about these short-pressure targets.
“If you are here chasing these stocks, there is a good chance that whoever is managing this account will be your source of liquidity to sell your passion to. “They are generating passion in the common people to get them to buy.” Sosnick was quoted as saying by Yahoo! Financial reports.
Nevertheless, the pursuers will pursue, as long as people listen.
