GameStop and AMC Both Skyrocket — Are Meme Stocks Back?

GameStop and AMC Both Skyrocket — Are Meme Stocks Back?

Meme stocks have seen their shares soar over the past week, so investors are left to wonder whether we’re in for another rollercoaster.

Over a year removed from the madness of the infamous GameStop (NYSE: GME) short-squeeze and meme stocks are still finding their way into the headlines. Yesterday saw two in particular catch the attention of investors, with the aforementioned GameStop’s shares spiking by 25%, while AMC (NYSE: AMC) shares shot up by a whopping 45%.

So, are we in for another round of meme-stock mania?

Why is AMC stock up so much?

Let’s take a look at AMC first. The company announced that it was buying a stake in a company that mines gold and silver — Hycroft Mining. The company is sitting on a war chest of roughly $1.8 billion, so this $28 million investment might not seem like much. What it is though, is a showing that AMC is willing to travel far outside of its typical remit in order to diversify its holdings.

Investors saw this move and decided to buy in, with AMC stock up over 70% in the past five days alone. CEO Adam Aron went so far as stating that “I’d like to think there will be more third-party external M&A announcements going forward where AMC can reach for the stars and intriguing investments that have potentially attractive returns.”

Short interest in AMC remains at close to 20%, so investors may be searching for another short squeeze that, as of now, has yet to come.

Why did GameStop stock rise yesterday?

Now to GameStop. News emerged last week that an investment company led by billionaire Ryan Cohen had bought 100,000 shares in the video-game retailer. GameStop’s stock responded by skyrocketing, with shares in the firm up over 36% in the past five days. 

Cohen, the founder of pet-retailer Chewy, is currently GameStop’s chairman, so this show of faith is certainly one for investors to take note of. He is also no stranger to the meme stock craze, with the billionaire investor having announced earlier in the month that he also owns nearly 10% of Bed Bath & Beyond.

Monday marked a 10th straight day of share price increases for GameStop, something we haven’t seen since early 2021. While some of this can certainly be attributed to a more positive-than-expected earnings call, Cohen’s influence and increased short interest seem to be moving the needle for the most part.

Should I invest in meme stocks?

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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