Monday’s dramatic surge, where the stock surged as much as 110% and faced multiple trading halts due to volatility, was sparked by the return of Keith Gill, aka “Roaring Kitty.” Gill’s bullish stance on GameStop had previously sparked the 2021 meme stock rally.
Before this recent surge, GameStop stock had been flat over the year, but had risen about 60% in the last month. With Tuesday’s premarket gains, shares are now up more than 180% for the month. AMC Entertainment (AMC) also posted significant gains during this period.
On Tuesday, AMC shares rose about 120% in early trading. According to an SEC filing, AMC issued about 72.5 million new shares, raising about $250 million.
Other stocks with high short-term interest also rose on Tuesday. SunPower (SPWR) is up 73%, Beyond Meat (BYND) is up 12%, and The Children’s Place (PLCE) is up almost 10%.
Nicholas Colas, co-founder of DataTrek Research, noted in a memo to a client that the recent trading activity resembles the meme stock surge of early 2021. Back then, GameStop stock soared 1,500% in January before losing most of those gains. Despite previous losses, short interest in GameStop remains high. Data from S3 Partners showed that 24% of GameStop’s float was sold short as of Monday.
Ihor Dusaniwsky, CEO of S3 Partners, reported that GameStop short sellers had lost more than $1.3 billion in May following Monday’s rally, with Tuesday’s spike adding to these losses.
Colas explained that traders who short a stock with such aggressive rallies often have no choice but to close their positions, regardless of the price. He also noted the potential for retail traders to revive the frenzy of 2021, which had attracted national attention and attracted many new investors during the pandemic lockdowns.
Tom Sosnoff, CEO of trading platform Tastylive, said the current rally differs from the 2021 surge, which he described as a pivotal moment that brought millions back into the market. However, YouTuber Matt Kohrs, who previously invested in GameStop and AMC, believes the central “little guy vs. big guy” conflict of the 2021 short squeezes is still relevant today. He argued that GameStop symbolizes a movement against a system perceived to favor the elite.
Kohrs added: “The only real change now is that people are no longer stuck at home,” reflecting on the different social context compared to the original meme stock boom.
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