Meme stocks have been seeing a sudden revival today as GameStop (NYSE: GME) and AMC (NYSE: AMC) have both been subject to some irregular trading patterns. The former had popped by over 20% at one point, with trading having to be stopped for volatility numerous times, while the latter has also skyrocketed by up to 18%.
Are we in for another round of meme-stock mania?
It's currently difficult to say if there's any one reason behind the sudden renewed interest in these stocks. Both GameStop and AMC are still a long way off of their respective highs from the first half of 2021. Some have begun to speculate that another trading frenzy similar to last year's madness is on the way, particularly as both stocks retain high degrees of short interest.
The furor of last year's infamous short-squeeze is still fresh in the minds of investors, with a 1,500% rise in less than a month in the case of GameStop a very hard thing to forget. Any sign of movement or news related to these meme-stocks can trigger a hyper-volatile reaction.
In particular, short interest in these firms can cause investors to rally, hoping for the next big squeeze. With short interest in GameStop and AMC currently at roughly 21% and 20% respectively, this could very well be the spark that ignited today's movement.
Meme stocks are volatile by nature -- they simply don't behave in a manner similar to most other stocks. They are almost entirely beholden to the whims of the internet community at large. Should you wish to invest in any of these companies, don't do so purely because of their meme status.
Examine the underlying fundamentals of the company, assess its long-term feasibility, and then consider purchasing. When you get down to it, a lot of these companies are standing on shaky ground. They can't rise forever, and you don't want to be the one standing on the rug when it gets unceremoniously pulled.
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