Meme Stocks Post Best Day Since June as GameStop, AMC Surge
(Bloomberg) -- A basket of so-called meme stocks is surging, fueled by afternoon rallies for GameStop Corp. and AMC Entertainment Holdings Inc.
The group of 37 retail-trader favorites tracked by Bloomberg soared 10% Tuesday, the most since early June, as trading volumes accelerated. GameStop and AMC, two of the most closely-followed meme stocks, surged 28% and 20% respectively.
The afternoon rally caught most analysts by surprise as investors await insights from Federal Reserve Chairman Jerome Powell’s address from Jackson Hole later this week.
“I was expecting some calm as we await Jackson Hole, but it looks like ‘Meme Stock Mania’ sees an opportunity here,” said Ed Moya, senior market analyst at Oanda Corp. “It seems this is retail jumping back in on their favorite trades after last Friday’s options expiration.”
Trading volume also jumped, with AMC surpassing 200 million shares traded for the first time since mid-June. With GameStop, roughly 14 million shares had changed hands, more than ten-times the amount typically traded over the past five sessions.
The dizzying rally marked the latest turn for a group of shares that have captivated investors throughout 2021. While the basket of meme stocks has surged more than 75% so far this year, the gains pale in comparison to the group’s top performing AMC and GameStop, which have piled up gains of roughly 2,000% and 1,000% respectively.
Retail traders have sent shares of once-abandoned stocks like AMC soaring since January when fee-free trading apps like those offered from Robinhood Markets Inc. became household names. The gains made AMC and GameStop the largest companies in the Russell 2000 earlier in the year before GameStop graduated to the Russell 1000 Index.
The strength spread to other retail favorites like Naked Brand Group and Clover Health Investments Corp., which at one point soared more than 10% each. Robinhood Markets, which itself has become a meme stock, rallied 9% Tuesday.
Options trading for both AMC and GameStop stood out compared to recent trends. AMC call options with a $40 and $50 strike price were among Tuesday’s most active for equity-linked derivatives, Bloomberg data show.
“Short interest seems to be a non-factor for both AMC and GameStop, so this move is just retail jumping back into call options,” Moya said.
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