GameStop and AMC see meme-stock frenzy ease after Roaring Kitty-fueled rally

By James Rogers

The meme-stock rally that lifted shares of GameStop and AMC was fueled by the social-media return of commentator Keith Gill, also known as Roaring Kitty

The meme-stock rally that sent shares of GameStop Corp. and AMC Entertainment Holdings Inc. skyrocketing last week appears to have calmed down.

GameStop (GME) shares reversed earlier losses to end Monday's session up 4.2%, while AMC (AMC) shares rose 9.8%. The companies saw their stock prices soar on May 13 and 14 - lifted by the return of commentator Keith Gill, also known as Roaring Kitty, to social media - but then pared back their gains. GameStop's stock ended Friday's session down 19.7%, while AMC shares fell 5.1% on the day.

"Sentiment is bearish," noted Stocktwits, a social-media platform for investors and traders, with regard to GameStop on Monday afternoon. "Is this bull run officially done?"

Riding the Roaring Kitty roller coaster: Why GameStop and AMC meme madness is an 'outlier event'

Roaring Kitty kicked off a busy week on social media with his first post on X, formerly Twitter, in three years on May 12. The investor and analyst was an influential figure in the meme-stock frenzy of 2021.

That was followed by a flurry of often cryptic posts last week that harnessed clips from movies and TV. Gill's most recent post on X came Friday afternoon and featured a clip from the movie "E.T. the Extra-Terrestrial." The clip shows the iconic scene in which E.T. says farewell to a tearful Elliott. As in many of Gill's posts last week, music also features prominently - in this case, the Supertramp song "Goodbye Stranger."

The rally sparked memories of the "gamification" of trading during the meme-stock heyday of 2021, but was also described as an "outlier event" by Victor Ricciardi, a visiting finance professor at Ursinus College and co-author of the book "Advanced Introduction to Behavioral Finance."

Related: AMC meme-stock rally 'is just pure hype,' analyst says

There was a twist in the week's events on Friday morning when GameStop delivered a quarterly profit-and-sales warning while filing to issue more shares. Analyst firm Wedbush Securities viewed the share-issuance positively and raised its GameStop price target on Friday to $7, from $5.60.

Other heavily shorted stocks - including SunPower Corp. (SPWR), Maxeon Solar Technologies Ltd. (MAXN), MicroCloud Hologram Inc. (HOLO), Children's Place Inc. (PLCE), Beyond Meat Inc. (BYND), Spirit Airlines Inc. (SAVE) and Plug Power Inc. (PLUG) - were also swept up in last week's meme-stock wave.

Related: Is the meme-stock frenzy over already? Possibly, say experts.

GameStop shares are up 32% in 2024, while AMC shares are down 21.1%.

-James Rogers

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05-20-24 1900ET

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