What the Soaring AMC Meme Stocks Mean for Companies

Meme stocks are back in the spotlight as shares in companies linked to speculative trading activity are soaring in value once again. Leading the charge is video game retailer GameStop, whose shares have surged approximately 180% to $48.75 after closing at $17.39 on Friday. Other stocks experiencing eye-watering rallies include AMC Entertainment Holdings, Blackberry, and headphone-maker Koss Corp.

These companies, previously overlooked by mainstream investors, have seen their fortunes revived by participants in the meme-stock mania. Fuelled by online forum discussions, especially on Reddit, these traders have demonstrated an almost cult-like ability to envision scenarios where these firms can thrive, leading to significant and largely speculative increases in their share prices.

GameStop, in particular, became a focal point of the meme stock frenzy in late 2020 when Ryan Cohen, co-founder of Chewy, outlined a plan to revitalize the struggling company. This attracted a legion of believers, driving GameStop’s stock price to unprecedented levels.

One of the key figures in the meme-stock movement, known as Roaring Kitty, recently signaled a return to action, aiming to drive up prices and squeeze short sellers who bet against these companies. As a result, GameStop short sellers are reportedly facing losses of over $2 billion at current trading levels.

While the companies themselves may not have made significant changes to justify the surge in their stock prices, they are capitalizing on the situation. AMC, for instance, announced a $250 million raise based on the increase in its stock value. This move, while benefiting the companies financially, also undermines the value of shares held by speculators.

Ultimately, meme-stock participants are not just in it for the money. They see their actions as a way to make a statement and challenge traditional market dynamics. As the meme stock phenomenon continues to unfold, the impact on both companies and investors remains a topic of keen interest.