The thing about meme stocks is that sometimes they move like meme stocks.
Shares of GameStop
and AMC Entertainment
rocketed upward Tuesday, helping to create a draft for related names like Bed Bath & Beyond
and Hycroft Mining Holding Corp.
with new and old meme names apparently benefiting from bullishness by retail investors on Reddit.
While the trading day gave rise to the growing meme portfolios of GameStop chairman Ryan Cohen and AMC CEO Adam Aron, it was a morning move on GameStop that appears to have incited the buying spree.
A Reddit post by user Thump4 that went up early Tuesday morning on subreddit WallStreetBets proposed that GameStop’s stock was trading at a 58.2% discount to its 15-month fair value.
Thump4 used a chart of the stock’s implied volatility and some options projections on contracts that suggested a calls-to-puts ratio of almost 2 to 1 into 2024. The post also purported to show that GameStop’s price had already double-bottomed in 2022.
Thump4 pointed to growing options activity on GameStop as a potential signal that short interest had peaked, playing into a larger thesis that the 15 month target price on GME is $225 a share.
The stock closed at $94.20 on Monday, but after the Reddit post received a few thousand upvotes, GameStop shares became the belle of Tuesday’s market ball, closing up 30.7% on the day at $123.15, nudging it closer to Thump4’s target price.
Slightly under 14 million shares of the videogame retailer also traded on the day, or more than four times its daily average volume. The last time trading in GameStop shares was this frantic was August 2021, according to Dow Jones data.
“The post was on our radar in premarket due to that it was the most upvoted and most discussed post on WallStreetBets,” said Ivan Cosovic, founder of Breakout Point, a data group focusing on meme stocks. “Maybe this started snowballing. It happens with OG meme stocks.”
Regardless of what else may have triggered the huge move on GameStop, a wider lift took place across a sector of meme stocks.
As it often does, the pump on GameStop led to price swelling on AMC shares, which closed up 15.1% on the day, after CEO Adam Aron spent the twilight hours ahead of the session tweeting insults at haters of his recent investment in Hycroft Mining, a Northern Nevada gold and silver mining company.
“So amusing. Narrow-minded call our Hycroft investment… “stupid”…“idiotic”” Aron tweeted at nearly 3 a.m. EST. “AMC so understands how to raise cash and stretch out debt…Add in a very low price for our shares/warrants. Tons of crow eating ahead, and it won’t be by me! #HaHa“
Aron added to that tweet a few minutes later, musing on how his quotes match up to the misattributed quotes of a beheaded French queen.
Regardless of whether the tweets had readers picturing Aron in a powdered wig eating tiny pastries or not, Hycroft shares traded up almost 5.7% on the day on action that was almost three times its daily volume.
Much of that movement occurred in 20 minutes between 11:30 a.m. and 11:50 a.m. Eastern, during which Hycroft pushed up 19.2%. After hours, the stock soared as high as 13%.
On social media, HYMC was hyped by AMC “Apes” who made it clear they see the two stocks as inexorably connected.
And speaking of connected, GameStop’s 30% move also seems to have impacted Bed Bath & Beyond shares, which climbed as high as almost 5% before closing up roughly 2.3% on the day, on less than average volume.
Ortex data showed that short interest on GameStop climbed almost 9% on Tuesday, while shorts piled into AMC at an 11% clip. That same data showed short interest on BBBY declining 0.7% on the day.
As for Hycroft, shorts added a collective 19% to the total short interest of the free float, feeding hope that a new short squeeze might be in the offing for retail investors.