GameStop And AMC Explode After Meme Stocks Continue to Roar
Two of the top meme stocks of the year GameStop and AMC have had another rally in the market doing surprising numbers over the last month. GameStop and AMC were both a part of the massive Reddit pump of meme stocks back in late January and are now continuing to thrive months later. Over the course of the past month, AMC is up over 60% while GameStop is also up over 38%. These numbers are shocking to many as people thought the short squeeze run for both of these stocks was over. Considering the valuation of these companies and the fundamentals behind the organizations both AMC and GameStop are very overvalued, which leads us to the question as to why these stocks are continuing to rise.
On Monday, AMC shares rose 10% to more than 15$ a share which is the highest the stock has been since the pump in January when the stock was trading at a high of $19.90 a share. Shortly days after the massive run in late January the stock came crashing down more than 70% which initially signaled the end of the short squeeze. In mid-April AMC’s short interest raised to a record high before falling by the end of the month along with trading volume and prices booming in May which may have led to investors selling out for a loss expecting the stock price to fall.
Citi Research analyst Jason Bazinet updated his price prediction on AMC from $2 a share to $3.70 but still strongly believes that AMC is still very overvalued. He believes that this price target reflects how AMC took advantage of this bull run and sold off shares to raise cash in their first-quarter earnings report. Although Baznit’s case for AMC is very bearish it did not hold the stock back after closing at $16.41 on Tuesday.
GameStop which was the biggest winner out of all of the meme stocks, also saw a large rally on Tuesday going up over 16% on the day and closing at just under $210 a share. This new closing price for GameStop is the highest it has been since the second short squeeze that occurred in mid-March. With many people still holding onto their shares this was amazing news to wake up to as Reddit users continue to celebrate the next run on meme stocks. Although GameStop shares crashed nearly 90% from their late January highs the stock is still up over 1100% in the past year. Due to the power of Wallstreetbets GameStop closed 46.5% higher than their May lows which was very surprising with the majority of the market falling this past month.
With the crazy runs in the stock market since the beginning of 2021, this has proven to the world that institutional investors can make a significant impact on the market. It cannot be said for sure what the future of GameStop and AMC stock will hold considering analysts believe both companies are severely overvalued. However, the power of Reddit users is strong, but will this mean another meme stock will be on the rise? Could GameStop and AMC be in for another short squeeze? Stay tuned to find out! Follow Emerald Investment Analysts to stay up to date on all your financial news, and let us know what you think down in the comments!
Written by: Aneeshan Balakaran