Meme stocks continued to rally Tuesday morning with GME, AMC, KOSS (KOSS), Virgin Galactic (SPCE) and BlackBerry (BB) all posting major early gains. Short sellers lost nearly $1 billion on GameStop stock during Monday’s massive surge, according to reports.
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AMC Entertainment (AMC) early Tuesday announced that on Monday it raised $250 million of equity capital after selling 72.5 million shares at an average price of $3.45 per share. Elsewhere Tuesday morning, Citi lifted its price target on AMC stock to $3.20 from $3.10, The Fly reported. Citi noted that AMC’s Q1 revenue and adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — were in-line with its preliminary results from May 8. Citi also expects AMC will use new equity to pay down a portion of its debt. However, Citi still believes AMC remains overvalued at current levels.
Meanwhile, GameStop (GME) short sellers suffered $838 million in market-to-market losses during the huge rally Monday, CNBC reported, citing data firm S3 Partners. Analysts at S3 expect more short covering on GME going forward. GME stock had what S3 definers as a 100/100 “squeeze score” prior to Monday’s trading. A higher squeeze score indicates a greater risk of a short squeeze relative to its peers, according to S3.
Roaring Kitty Returns
GameStop stock and AMC shares soared Monday after Keith Gill, who sparked the meme stock rally during the pandemic, made his return to social media for the first time in three years. The New York Stock Exchange temporarily paused trading on GME stock multiple times early Monday as shares careened higher.
Gill, known by his social media name Roaring Kitty, on Sunday night posted on social media platform X for the first time since June 2021. The post was an image of a meme implying he is “getting serious.”
Gill rose to infamy in 2020 and 2021 as one of the key drivers for the GameStop (GME) short squeeze. The former financial broker and analyst was eventually called to testify in front of the House Financial Services Committee in February 2021 regarding a probe on potential market manipulation.
Retail investors celebrated with comments like “he’s back,” and “game on,” or “just in time for the memecoin supercycle,” in a reference to rising prices for smaller cryptocurrencies.
Previous Short Squeeze
Shares of GME stock surged 688% in 2021. Individual investors coordinated a buying spree in the video-game retailer’s shares using online message boards. The buying surge caught by surprise the short sellers who were betting the stock would fall. These “shorts” faced unlimited losses unless they bought the stock, further fueling gains.
It was an innovative, but controversial way to push GME stock higher.
GME stock ironically went up because it fell so much. And a large share of investors thought it would fall more.
Coming into 2021, GME shares had lost a third of their value over the previous five years. Investors betting the stock would fall, the short sellers, controlled GME stock shares in late 2019. That overly bearish bet set up a perfect environment for a massive short-squeeze rally.
The entire short squeeze saga was detailed in the movie “Dumb Money.”
Meme Stock Action
GME stock soared another 98% early Tuesday, adding to its 74.4% rally Monday. GME stock ended Monday up 73.7% in 2024. Shares are trading at their highest level since June 2021.
AMC stock jumped 121% at the open Tuesday, rebounding to its highest price since September. Shares soared 78.4% on Monday. Despite the rally this week, AMC stock is down 15.2% through Monday’s close.
Other meme stocks climbed early Tuesday as the GME and AMC rallies gained steam. Koss shares leapt 57% Tuesday morning and spiked 36.7% Monday. BlackBerry shares bolted 23% Tuesday after advancing nearly 7% Monday. Virgin Galactic stock flew 21% higher Tuesday after climbing 9.2% Monday.
Other names including Beyond Meat (BYND), Rent The Runway (RENT) and SunPower (SPWR) were unusually active.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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First appeared on www.investors.com