GameStop, AMC surge as return of 'Roaring Kitty' rekindles meme stock mania (updated)

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14/05/2024 13:40

(Adds analysts comments in paragraph 5 and 14, short selling
data in paragraph 8)
    By Medha Singh
       May 14 (Reuters) - 
    Retail darlings GameStop  GME.N  and AMC  AMC.N  surged on
Tuesday after posts from "Roaring Kitty" Keith Gill raised
chatter about the return of the central figure behind the 2021
meme stock frenzy, setting off a rally in the shares.
  
        The stocks more than doubled before the bell and were
set to extend gains from the previous session after Gill shared
a meme and more than 10 clips from movies, including "X-Men
Origins: Wolverine", "The Avengers" and 1993 Western
"Tombstone".    
  
        Even though the posts did not mention company names,
shares of video game retailer GameStop and AMC, the world's
largest theatre chain, were the most-traded stocks by retail
investors on Monday, J.P.Morgan data showed.
  
        That was mainly because Gill, who is returning to social
media platform X after a gap of nearly three years, is credited
with sparking the so-called Reddit rally in January 2021 with
bullish calls on video game retailer GameStop.
  
    "The fact that Roaring Kitty is back should be totally
meaningless to the stock market (but) the fact that it isn't is
fascinating," said Matthew Tuttle, CEO of Tuttle Capital
Management.
    "Meme stocks coming back juices the entire market of the
stocks that a lot of retail guys like to trade and provides them
opportunities to make money outside of buy and hold."
    GameStop surged as much as 118% on Monday and closed at a
two-year high. Its market capitalization jumped nearly $4
billion to $9.32 billion.
    Short sellers of the stock were set to lose $1.2 billion on
paper on Tuesday, slightly more than Monday's losses, analytics
firm Ortex Technologies said.
    AMC surged 78% to $5.19 and more than doubled from a record
low hit in mid-April.
    The frenzy also spread to shares of micro-cap companies.
    Headphones maker Koss  KOSS.O , U.S.-listed shares of
BlackBerry  BB.N  and food storage container company Tupperware
 TUP.N  rose between 34% and 15% on Tuesday.
    Shares of Reddit  RDDT.N  rose 3.3%. The social media firm
was used by retail investors in 2021 to coordinate and target
highly shorted stocks, culminating into a Wall Street versus
Main Street battle.
    Analysts said the speculative trades are unlikely to last
long as the economic backdrop of hot inflation and high interest
rates is in stark contrast to the era of cheap money and
pandemic savings in 2021.
    "This meme rally maybe rhymes with 2021 but is unlikely a
repeat," said Ben Laidler, global markets strategist at digital
brokerage eToro.
    Retail investor-focused brokerage Robinhood  HOOD.O , which
made zero-commission trades mainstream, gained 1.5%. 

 (Reporting by Medha Singh in Bengaluru; Editing by Krishna
Chandra Eluri and Arun Koyyur)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; X, formerly
Twitter: @medhasinghs;))