June 19, 2024

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5 Ways The GameStop, Meme Stocks Rally Could Fizzle: Stock Offerings, Boredom And More – GameStop (NYSE:GME)

3 min read

Shares of GameStop Corporation GME and other meme stocks are rocketing higher in the first two days of the trading week, drawing comparisons to the meme stock rally of 2021.

The meme stock rally of 2021 was eventually brought to an end thanks to several developments. Here’s a look back at the past and what the future could hold.

Related Link: Who Is Roaring Kitty? Why Does His Return To Social Media Matter For GameStop Stock?

  1. Stock Offerings: One move that could throw cold water on rallying meme stocks: a share offering by one of the popular companies like GameStop or AMC Entertainment Holdings AMC. CNBC host Jim Cramer sounded a cautionary note on this, saying he was “waiting for AMC to issue stock to the throng.” Cramer also said that GameStop “would be nuts” if it did not authorize an at-the-money share offering to “raise cash and reinvest.” A share offering could leave investors feeling duped or bowing out from their trade.
  2. Congressional Action: The rally in 2021 led to a Congressional hearing that saw Keith Gill, aka Roaring Kitty, and others connected to the GameStop storyline being compelled to testify. Congress got involved before brokerages stopped trading on certain stocks and elected officials also used the events to call for increased regulation over the stock market.
  3. Roaring Kitty X Account: The posting of a meme by the Roaring Kitty account on Sunday kickstarted the latest rally. On Monday and Tuesday, the account posted numerous videos with clips from movies suggesting he’s back, the trade isn’t over and that perhaps a sequel is planned. While there is no proof to suggest it, there is the possibility that this is not actually Roaring Kitty posting. Roaring Kitty previously posted on Reddit and shared videos on YouTube with his face as well as posted on X, formerly known as Twitter. The posts have not contained any video from Gill himself. This could mean Gill isn’t ready to show himself publicly — or someone else could be posting. It’s possible Gill’s account could have been hacked or purchased by someone else.
  4. Brokerages: A contributing factor to the end of the meme stock rally in 2021 was brokerages halting trading in certain stocks and allowing users only to sell, not buy new positions. This move led to many saying the small investors, aka David, will never win in a battle against the hedge funds and big investors, aka Goliath. Shares of multiple meme stocks were halted on Monday and Tuesday due to volatility. This time around traders can be more active with the stocks thanks to 24-hour trading now being availble on several brokerages. Cramer has praised Robinhood Markets HOOD, perhaps sarcastically, for “keeping the casino open at all hours.”
  5. New Shiny Object: Retail investors have grown in number in recent years, which often means that certain markets see increased volatility as traders chase trends. The rise in volatility and value has hit meme coins, cryptocurrencies, value stocks, artificial intelligence stocks, trading cards and even bonds in recent years. While investors are glued to the action of meme stocks right now, that attention could eventually die out depending on share prices — or another “shiny object” that captures everyone’s attention coming along.

GME Price Action: GameStop shares closed 59.84% higher at $48.75 Tuesday, hitting new 52-week highs of $64.83 during the intraday session.

Read Next: If You Invested $1,000 In GameStop Stock When ‘Dumb Money’ Was Released In Movie Theaters, Here’s How Much You’d Have Today

Market News and Data brought to you by Benzinga APIs

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