GameStop stock has been rallying recently.
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GameStop and AMC Entertainment stocks had such a bad January that it was easy to proclaim the death of the meme trade. But after three days of big gains, there appear to be signs of life in these retail-investor favorites.
January was terrible for the meme stocks. GameStop (ticker: GME) dropped 27% last month, while AMC fell 41%. February has been better, particularly Tuesday, Wednesday, and Thursday of this week. AMC has gained 34% over those three days, while GameStop has rallied 25%.
It’s hard to tell what’s behind the rally. AMC, for instance, said it would give Batman non-fungible tokens to moviegoers who buy tickets before the release of The Batman. The company also hired a new vice president of growth strategy, a job that could include bringing movie popcorn to other retail outlets. Neither of those is likely responsible for the jump in AMC’s stock. GameStop, meanwhile, has been making headway in its plans to enter the NFT market.
Whatever the reason, at least the stocks have stopped dropping. The question now, of course, is whether this is anything more than a short-term blip. AMC, after all, rose 30% from Dec. 13 through Dec. 21 before sliding again. GameStop’s stock followed a similar problem.
The Fed is the wild card. If easy money helped propel the meme stocks and other speculative corners of the market, then the lack of easy money could help cause them to sink. And with inflation still soaring, monetary policy is likely to get much tighter very quickly. “These market segments benefited the most from the abundance of liquidity early in the recovery and are among the most vulnerable as policy support lessens,” writes Keith Lerner, chief market strategist at Truist Advisory Services.
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Write to Ben Levisohn at [email protected]
