MW Roaring Kitty, rumors, and 'tin foil hat conspiracy theorists': What's next for meme stocks?
By James Rogers
Meme stocks are alive and kicking, despite rumors of their demise, says Derek Horstmeyer, professor of finance at the Costello College of Business at George Mason University
The last few months have seen a resurgence of interest in meme stocks, boosted by the surprise return of influential trader Keith Gill, also known as Roaring Kitty, to social media.
The recent flurry of activity proved that meme stocks are alive and kicking, despite rumors of their demise. "I think we all predicted meme stocks will disappear when they raised interest rates, that it would stop the party, but it didn't," Derek Horstmeyer, a professor of finance at the Costello College of Business at George Mason University. "I think when they lower them, it's going to be more full on - you can borrow at a lower cost.
"I think the party will be even more on," he added.
Related: Why Roaring Kitty is a GameStop 'true believer'
Gill posts as Roaring Kitty on X, formerly known as Twitter, and YouTube. He uses the moniker u/DeepF-ingValue when posting on Reddit Inc. (RDDT). While Gill clearly looms large over the meme-stock landscape, Horstmeyer thinks that other figures could also emerge as key players. "You never know who is going to be the next celebrity in this circle of meme-stock investors," he said.
The professor pointed to AMC Entertainment Holdings Inc. $(AMC)$ CEO Adam Aron and his relationship with the investors, who refer to themselves as 'apes', that turned the movie-theater chain into an original meme stock in 2021. "Who would have predicted the AMC CEO becoming beloved in the meme world?" Horstmeyer added.
Gill, a pivotal figure in the 2021 meme stock frenzy, recently increased his stake in meme stock GameStop Corp. $(GME)$, sending it skyrocketing. The trader also voiced his support for GameStop Chief Executive Ryan Cohen in his first livestream since 2021 on June 7.
Related: GameStop's stock suffers worst day since 2021 despite Roaring Kitty livestream
There was another meme stock twist on June 27 when Gill posted an image of a dog on X. The post sparked speculation that it could be a reference to Chewy Inc. $(CHWY)$, an online retailer of pet products, sending the stock surging.
GameStop CEO Ryan Cohen is the former CEO and co-founder of Chewy.
It was subsequently disclosed in a filing with the Securities and Exchange Commission that Gill has a 6.6% stake in Chewy.
Related: Roaring Kitty cements Chewy's meme-stock status, despite company's improving fundamentals
Other stocks, such as BlackBerry Ltd. $(BB)$ and headphone maker Koss Corp. $(KOSS)$ were also lifted in the recent meme-stock frenzy, with the latter climbing again on rumors that Gill would be buying shares.
"Here we go again," wrote @WingGirlTrader, on X, formerly Twitter, with a facepalm emoji, on July 5. "Stock spiking of rumor of Roaring Kitty getting involved in purchasing shares."
"Thanks to the tin foil hat conspiracy theorists on reddit for this one!" wrote @neel_trades on X on July 3. "Happy with this trade all around, great one to review and add to the database."
Related: Koss's stock pares gains after spike amid rumors of interest from Roaring Kitty
Gill has not made any public posts about Koss.
Finance Professor Horstmeyer thinks that meme stocks will be around for the foreseeable future.
"As long as you have these platforms that charge no fees, and there's more and more products out there - the more leveraged products there are, the more these meme stocks will pop up," he told MarketWatch.
The anti-establishment vibe that swirls around the meme-stock world will also endure, thanks in no small part to social media, according to Horstmeyer.
"A lot of these meme stocks, people think that they are sticking it to the powers that be," he said. "To screw over the high-frequency traders, to screw over the shorts."
-James Rogers
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July 11, 2024 08:05 ET (12:05 GMT)
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