Reddit traders seem to be pushing these outdated business model companies again.
The meme stocks are back again, but the frenzy could be short-lived.
All three stocks have risen during the past five days with GameStop leading the rise in valuation.
GameStop, which was beloved by retail traders, was trading at $28.78 on Monday, an increase of 13.75% during the past five days. The stock has tried to climb back to its closing price of $45.82 on Oct. 15, 2021, which is a decline of 37%.
Bed Bath & Beyond shares are trading now at $4.67, which has risen by 7.81% during the past five days. The stock is still trading much lower -a decline of 66% when it was trading at $13.99 on Oct. 15, 2021.
AMC shares have also rebounded. They were trading at $6.65 at mid-day on Monday, an increase of 4.44% compared to the past five days. The stock has taken a large hit and plummeted by 83.6% from its closing price of $40.74 on Oct. 15, 2021.
The return of the meme stock frenzy comes at a time when technology stocks, big winners of the covid-19 pandemic, are in retreat.
‘You Deserved It’
Tech giants lost a massive $560 billion in market value at some point last week after Amazon AMZN led a disastrous earnings season for the mega cap companies. Microsoft MSFT, Alphabet GOOGL and Meta Platforms META all reported disappointing earnings, while Apple AAPL warned it was still impacted by supply chain disruptions.
The Nasdaq Composite Index, better known as the Nasdaq, has faced its own volatility as big tech companies have lost billions of dollars in valuations during the third quarter following weaker than expected earnings. The Nasdaq reached 11,035.02 points on Monday, but was at 14,823.43 points on Oct. 15, 2021, a decline of 25%.
As with the first meme stock frenzy in January 2021, the new excitement seems to be fueled by retail investors who often meet on social media and especially on channels on Reddit to discuss investment strategies.
Retail investors on Reddit’s Wallstreetbets page discussed the volatility in stocks such as GME with one trader commenting, “Shit like today is why I got numb to GME volatility. You just never know what happens with the stock. +/-20% clusterfuck on random day with high ass volume and no one knows why 😄”
Another trader said, “If you FOMOd into GME this morning, you deserved it.” FOMO stands for fear of missing out.
Many traders focused on GME with another investor warning “all the GME bag holders -50% on their shares today pumping when it’s +15% lmao just to create new bag holders creating momentum downwards”
Bed Bath & Beyond Stocks See Heavy Volume
Bed Bath & Beyond traders were also expressing their dissatisfaction with one person stating “since the volume is higher today than the past couple weeks, would this mean it makes it easier for BBBY to complete the ATM share offering sooner rather than later?”
The amount of shares being traded for BBBY was noticed by one trader who said, “Impressive volume today too – 10M in 40 minutes vs avg volume of 8M over the last month. We’ve seen quite a huge increase since October 21st in terms of volume for some reason.”
Opinions were however divided on this sudden rise of the Same stocks. Some traders of GME seemed relieved.
“Today was a good day 😌” one said.
Another trader was less impressed with the price of the stock and said, “what a joke. Up 20% then dump right away. Will it ever break out for real?”
In general, the problem surrounding the meme stocks remains the same: how to reinvent their economic business so as not to disappear. For the moment, they are still struggling to convince that the initiatives undertaken are the right ones.
This could indicate that their return is to be attributed to the market rebound in October.
The markets rebounded in October even though mega cap tech stocks took a major hit with the three major indexes all up.
The Dow, 30-stock index is on pace for its best month since 1976, and increased by 14.1% for the month. The S&P 500 and Nasdaq Composite have also risen by 8% and 4%, respectively.