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What We Learned From the Meme Stock Sequel

This second iteration of meme stock mania has Wall Street’s fingerprints all over it. While the so-called “Reddit Raiders” that propelled GameStop and AMC “to the moon” in 2021 certainly made a cameo, more sophisticated investors — who use machine-learning and algorithms to trade on momentum, and can even front-run the buying and selling of individual investors — appear to have been in on the action. On Fidelity’s retail trading platform, for instance, users have been placing more sell than buy

What We Learned From the Meme Stock Sequel

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":306664698998904,"tweetId":"306664698998904","gmtCreate":1715873150453,"gmtModify":1715873155349,"author":{"id":3557396129396340,"idStr":"3557396129396340","authorId":3557396129396340,"authorIdStr":"3557396129396340","name":"YuZhao","avatar":"https://static.tigerbbs.com/25f11e9b628cbbddb008a480e497b950","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":1,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body>Great article, would you like to share it?</body></html>","htmlText":"<html><head></head><body>Great article, would you like to share it?</body></html>","text":"Great article, would you like to share it?","highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/306664698998904","repostId":1153454968,"repostType":2,"repost":{"id":"1153454968","kind":"news","pubTimestamp":1715871600,"share":"https://www.laohu8.com/m/news/1153454968?lang=&edition=full","pubTime":"2024-05-16 23:00","market":"us","language":"en","title":"What We Learned From the Meme Stock Sequel","url":"https://stock-news.laohu8.com/highlight/detail?id=1153454968","media":"Bloomberg","summary":"This second iteration of meme stock mania has Wall Street’s fingerprints all over it. While the so-called “Reddit Raiders” that propelled GameStop and AMC “to the moon” in 2021 certainly made a cameo, more sophisticated investors — who use machine-learning and algorithms to trade on momentum, and can even front-run the buying and selling of individual investors — appear to have been in on the action. On Fidelity’s retail trading platform, for instance, users have been placing more sell than buy ","content":"<html><head></head><body><p>Wall Street had a here-we-go-again moment this week, with the sudden return of meme stock euphoria. A two-day rally led investors to rush back into a group of stocks that soared during the pandemic, when individuals teamed up across social media to bet against short-selling hedge funds. Yet things look very different than they did in 2021, when the retail crowd could point to rock-bottom interest rates, benign inflation and surging e-commerce to help justify the stratospheric valuations<em>.</em></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/347c4ae88ce86302ea0a7956f15ac223\" alt=\"A GameStop store in New York.\" title=\"A GameStop store in New York.\" tg-width=\"2000\" tg-height=\"1333\"/><span>A GameStop store in New York.</span></p><h3 id=\"id_3569934289\" style=\"text-align: start;\">Has the frenzy faded already?</h3><p style=\"text-align: start;\">Shares of GameStop Corp., the brick-and-mortar video-game seller — and a favorite meme stock from 2021 — more than tripled at one point this week on no fundamental news. Beleaguered movie theater operator AMC Entertainment Holdings Inc., the other poster child of the 2021 craze, soared 135% in two days. The number of GameStop shares traded was 28-times the average over the past year; more than a billion AMC shares changed hands. Yet as quickly as the stocks — and other downtrodden firms and speculative corners of the market — soared, they reversed course. GameStop shares dropped 19% on May 15 and AMC erased one-fifth of its value.</p><h3 id=\"id_4033275186\" style=\"text-align: start;\">Who is “Roaring Kitty” and what did he do?</h3><p style=\"text-align: start;\">A single post on X Sunday night from Keith Gill, the retail-trading icon who goes by the moniker “Roaring Kitty,” electrified Reddit’s WallStreetBets forum, a range of Discord chats and the popular chatroom StockTwits. The perceived return of the man who drove the original mania — GameStop soared more than 1,000% in a few days back then — was met with enthusiasm on social media, which he disappeared from in June 2021.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/15ceb939f878ba778db040f174791223\" tg-width=\"827\" tg-height=\"1071\"/></p><p>Roaring Kitty was one of the characters portrayed in last year’s movie <em>Dumb Money</em>, based on the events of the 2021 short squeeze when a group of retail investors ignored fundamentals and troubled business models and spurred each other into buying certain stocks in a giant bet against the investing professionals of Wall Street. GameStop, AMC, Bed Bath &amp; Beyond and other companies swept up in the craze became known as “meme stocks,” in a nod to the images posted by investors on social media — Gill’s Sunday night post being the latest example.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/63ece7e6a7cb59aad3d4a3f1f0997429\" tg-width=\"1200\" tg-height=\"675\"/></p><h3 id=\"id_2350153021\">How was this meme stock rally different to the last?</h3><p>This second iteration of meme stock mania has Wall Street’s fingerprints all over it. While the so-called “Reddit Raiders” that propelled GameStop and AMC “to the moon” in 2021 certainly made a cameo, more sophisticated investors — who use machine-learning and algorithms to trade on momentum, and can even front-run the buying and selling of individual investors — appear to have been in on the action. On Fidelity’s retail trading platform, for instance, users have been placing more sell than buy orders since the Roaring Kitty tweet went viral, the company’s website shows. That’s a signal that individuals are actually cashing in on the gains. The number of orders are also a fraction of what they were at 2021’s peak.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/041ac092ea42a1422242544648d9054e\" tg-width=\"1200\" tg-height=\"675\"/></p><p>The staying power of meme stocks is dependent on retaining the attention of the group that triggered the 2021 mania. The sequel may have been shorter-lived in part because the group of homebound investors who flocked to the Robinhood app to trade call options during the pandemic now have other demands on their time — work, school, etc.</p><p>Also, keep in mind that many of the factors that sparked the original meme craze have dissipated. Workers have returned to offices, credit card delinquencies are at decade highs and whatever was left over from those pandemic stimulus checks finally got spent at a Taylor Swift or Beyonce concert. Without individuals flush with cash, ready to buy whatever meme stock they fancy, their ability to defy gravity is largely dependent on Wall Street.</p><h3 id=\"id_1712039263\" style=\"text-align: start;\">How did the short sellers fare this time?</h3><p style=\"text-align: start;\">Another driver of the 2021 craze was the eye-popping short-interest ratios for many of the companies. Skeptical investors took out short positions representing 140% of GameStop’s shares that were freely traded, leaving hedge funds badly burned when the stock rallied. In 2021, Gabe Plotkin’s Melvin Capital Management was shuttered because of losses from the short bet. This time round, the investors who were brave enough to bet against GameStop and AMC faced paper losses of more than $1 billion at one point this month before gravity finally set in. While those mark-to-market losses appear great, the level of pain was far smaller given that closer to one-fifth of shares in the two meme stocks were used for short trades.</p><h3 id=\"id_4197717399\" style=\"text-align: start;\">Have the companies benefited at all?</h3><p style=\"text-align: start;\">AMC managed to capitalize on its latest meme moment, reducing its debt and adding to its balance sheet—all while diluting shareholders. The company took advantage of a fundraising deal known as an at-the-market (ATM) offering, which allowed it to create and sell new shares. After selling them for about $125 million on the open market, AMC then swapped about $164 million of debt for newly-issued stock.</p><p>GameStop did not have such an offering lined up — ditto<em> </em>with many beaten-down companies that also saw<em> </em>their shares soar for no fundamental reason. Such companies may look to complete the necessary paperwork for these offerings in the future since a surge in share price and volume can let them “access a lot of capital in short time,” according to Josh Weismer, head of US equity capital markets at Mizuho Americas.</p><h3 id=\"id_2856478690\" style=\"text-align: start;\">What comes next?</h3><p style=\"text-align: start;\">With trading volumes across the meme stocks tapering through Wednesday alongside declining share prices, the next step will be dependent on whether Roaring Kitty or another player can provide a spark. The meme craze of 2021 — and this latest flurry — were predicated on a mostly quiet market backdrop and a rush of trading volume. In terms of fundamental updates that could draw in more traders, AMC’s annual shareholder meeting is June 5 and GameStop’s quarterly results and investor event are both expected in June.</p><h3 id=\"id_3804841241\" style=\"text-align: start;\">Will there be more meme stock moments?</h3><p style=\"text-align: start;\">Probably. The overall US stock market is at record highs and there’s still cash on the sidelines; fundamental investors say there’s plenty of froth when joke cryptocurrencies keep popping up and Bitcoin is above $65,000. If nothing else, Gill’s latest meme was a reminder that a social media post can trigger a global phenomenon, even if the novelty of the madness seems to be fading.</p><p style=\"text-align: start;\">What the next meme stock is — and how long a frenzy might last — will depend on its ability to capture the attention and imagination of traders. Different companies can also carry the meme-stock baton for stretches of time. Just don’t underestimate the power of the retail crowd, which has pushed into companies such as Hertz Global Holdings Inc. even before Roaring Kitty was a known figure.</p></body></html>","source":"lsy1584095487587","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>What We Learned From the Meme Stock Sequel</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhat We Learned From the Meme Stock Sequel\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-16 23:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.bloomberg.com/news/articles/2024-05-16/gamestop-shares-roaring-kitty-and-the-meme-stock-sequel-what-we-learned?srnd=homepage-americas><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Wall Street had a here-we-go-again moment this week, with the sudden return of meme stock euphoria. A two-day rally led investors to rush back into a group of stocks that soared during the pandemic, ...</p>\n\n<a href=\"https://www.bloomberg.com/news/articles/2024-05-16/gamestop-shares-roaring-kitty-and-the-meme-stock-sequel-what-we-learned?srnd=homepage-americas\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GME":"游戏驿站","AMC":"AMC院线"},"source_url":"https://www.bloomberg.com/news/articles/2024-05-16/gamestop-shares-roaring-kitty-and-the-meme-stock-sequel-what-we-learned?srnd=homepage-americas","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1153454968","content_text":"Wall Street had a here-we-go-again moment this week, with the sudden return of meme stock euphoria. A two-day rally led investors to rush back into a group of stocks that soared during the pandemic, when individuals teamed up across social media to bet against short-selling hedge funds. Yet things look very different than they did in 2021, when the retail crowd could point to rock-bottom interest rates, benign inflation and surging e-commerce to help justify the stratospheric valuations.A GameStop store in New York.Has the frenzy faded already?Shares of GameStop Corp., the brick-and-mortar video-game seller — and a favorite meme stock from 2021 — more than tripled at one point this week on no fundamental news. Beleaguered movie theater operator AMC Entertainment Holdings Inc., the other poster child of the 2021 craze, soared 135% in two days. The number of GameStop shares traded was 28-times the average over the past year; more than a billion AMC shares changed hands. Yet as quickly as the stocks — and other downtrodden firms and speculative corners of the market — soared, they reversed course. GameStop shares dropped 19% on May 15 and AMC erased one-fifth of its value.Who is “Roaring Kitty” and what did he do?A single post on X Sunday night from Keith Gill, the retail-trading icon who goes by the moniker “Roaring Kitty,” electrified Reddit’s WallStreetBets forum, a range of Discord chats and the popular chatroom StockTwits. The perceived return of the man who drove the original mania — GameStop soared more than 1,000% in a few days back then — was met with enthusiasm on social media, which he disappeared from in June 2021.Roaring Kitty was one of the characters portrayed in last year’s movie Dumb Money, based on the events of the 2021 short squeeze when a group of retail investors ignored fundamentals and troubled business models and spurred each other into buying certain stocks in a giant bet against the investing professionals of Wall Street. GameStop, AMC, Bed Bath & Beyond and other companies swept up in the craze became known as “meme stocks,” in a nod to the images posted by investors on social media — Gill’s Sunday night post being the latest example.How was this meme stock rally different to the last?This second iteration of meme stock mania has Wall Street’s fingerprints all over it. While the so-called “Reddit Raiders” that propelled GameStop and AMC “to the moon” in 2021 certainly made a cameo, more sophisticated investors — who use machine-learning and algorithms to trade on momentum, and can even front-run the buying and selling of individual investors — appear to have been in on the action. On Fidelity’s retail trading platform, for instance, users have been placing more sell than buy orders since the Roaring Kitty tweet went viral, the company’s website shows. That’s a signal that individuals are actually cashing in on the gains. The number of orders are also a fraction of what they were at 2021’s peak.The staying power of meme stocks is dependent on retaining the attention of the group that triggered the 2021 mania. The sequel may have been shorter-lived in part because the group of homebound investors who flocked to the Robinhood app to trade call options during the pandemic now have other demands on their time — work, school, etc.Also, keep in mind that many of the factors that sparked the original meme craze have dissipated. Workers have returned to offices, credit card delinquencies are at decade highs and whatever was left over from those pandemic stimulus checks finally got spent at a Taylor Swift or Beyonce concert. Without individuals flush with cash, ready to buy whatever meme stock they fancy, their ability to defy gravity is largely dependent on Wall Street.How did the short sellers fare this time?Another driver of the 2021 craze was the eye-popping short-interest ratios for many of the companies. Skeptical investors took out short positions representing 140% of GameStop’s shares that were freely traded, leaving hedge funds badly burned when the stock rallied. In 2021, Gabe Plotkin’s Melvin Capital Management was shuttered because of losses from the short bet. This time round, the investors who were brave enough to bet against GameStop and AMC faced paper losses of more than $1 billion at one point this month before gravity finally set in. While those mark-to-market losses appear great, the level of pain was far smaller given that closer to one-fifth of shares in the two meme stocks were used for short trades.Have the companies benefited at all?AMC managed to capitalize on its latest meme moment, reducing its debt and adding to its balance sheet—all while diluting shareholders. The company took advantage of a fundraising deal known as an at-the-market (ATM) offering, which allowed it to create and sell new shares. After selling them for about $125 million on the open market, AMC then swapped about $164 million of debt for newly-issued stock.GameStop did not have such an offering lined up — ditto with many beaten-down companies that also saw their shares soar for no fundamental reason. Such companies may look to complete the necessary paperwork for these offerings in the future since a surge in share price and volume can let them “access a lot of capital in short time,” according to Josh Weismer, head of US equity capital markets at Mizuho Americas.What comes next?With trading volumes across the meme stocks tapering through Wednesday alongside declining share prices, the next step will be dependent on whether Roaring Kitty or another player can provide a spark. The meme craze of 2021 — and this latest flurry — were predicated on a mostly quiet market backdrop and a rush of trading volume. In terms of fundamental updates that could draw in more traders, AMC’s annual shareholder meeting is June 5 and GameStop’s quarterly results and investor event are both expected in June.Will there be more meme stock moments?Probably. The overall US stock market is at record highs and there’s still cash on the sidelines; fundamental investors say there’s plenty of froth when joke cryptocurrencies keep popping up and Bitcoin is above $65,000. If nothing else, Gill’s latest meme was a reminder that a social media post can trigger a global phenomenon, even if the novelty of the madness seems to be fading.What the next meme stock is — and how long a frenzy might last — will depend on its ability to capture the attention and imagination of traders. Different companies can also carry the meme-stock baton for stretches of time. Just don’t underestimate the power of the retail crowd, which has pushed into companies such as Hertz Global Holdings Inc. even before Roaring Kitty was a known figure.","news_type":1},"isVote":1,"tweetType":1,"viewCount":232,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":35,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}