Reddit Plays Soar as Earnings Give Fundamental Boost to Rallies
(Bloomberg) -- Earnings for a handful of meme stocks are delivering a fundamental boost to companies that have been riding the wave of Reddit-inspired retail trading.
Mall-based retailers Express Inc. and Build-a-Bear Workshop Inc. were among day-trader favorites to soar Wednesday after reporting fourth-quarter results. The look under the hood at financials for both companies gave investors a fundamental reason to dive into the stocks, which had generally been riding optimism from amateur traders looking to strike it rich.
Express surged as much as 46% to $4.95 while Build-a-Bear rallied 23% to $8.80. The strength across Reddit plays leaked over to companies such as AMC Entertainment Holdings Inc., which is set to report results this evening.
The speculative rallies for companies being touted on social media platforms like Twitter and Reddit have come alongside the gamification of investing and a surplus of consumers looking for entertainment during the pandemic. While Wall Street has warned the swings come without respect to stock fundamentals, the flow of earnings reports may give investors something to tether their bets to.
Express said it’s finalizing a plan to grow its digital channel to $1 billion in 2024 while Build-a-Bear laid out expectations for pre-tax income to grow. For AMC, updates on liquidity ahead of movie theater reopenings will be key when it reports this evening.
While the retail roller coaster has been captivating everyone from Wall Street to Washington, the group’s poster child GameStop Corp. is due to provide a crucial update on March 23. Its quarterly results could prove to be a key test for investors as the video-game retailer most often tumbles after results.
Super League Gaming Inc., another retail-trader favorite who’s seen wild share swings this month, will report fourth-quarter results Thursday evening and Sundial Growers Inc. has earnings slated for next week.
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