GameStop, AMC, and other Reddit favorites climb as day traders look to reignite momentum
- GameStop, AMC, and other Reddit-favorite stocks gained on Monday as day traders aimed to spark rallies.
- The stocks have fluctuated in recent sessions as bullish momentum locks horns with profit-taking.
- Day traders now lack the element of surprise, and regulators are investigating whether Reddit posts constituted manipulation.
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GameStop, AMC Entertainment, and other so-called meme stocks gained on Monday as retail investors looked to fuel new rallies.
The video-game retailer rose as much as 10.1%. AMC climbed 13.7%. BlackBerry and Express swung 5.2% and 7.4% higher.
The stocks have traded with elevated volatility in recent sessions as day traders congregating online try to repeat the surges at the start of the year. Recent posts on Reddit's Wall Street Bets and other trading forums praising the upswing garnered thousands of comments and votes of approval. And while the companies are trading well below their January highs, they still boast huge year-to-date gains.
The gains followed broad selling across the Reddit favorites. The stocks tumbled in Friday trading after rising in the previous session, underscoring the back-and-forth action since January's extraordinary rallies.
Retail investors looking to lift prices again face a tougher challenge. The Reddit-savvy traders had the element of surprise when they first bid up shares, and their ability to shock the market establishment helped to publicize the trade. The stocks' unusually high short interest also exacerbated the rallies as bearish investors had to buy shares to cover their souring bets.
Those surges are old news now, and Wall Street has caught on to the Reddit traders' antics. Hedge funds started tracking posts on relevant forums to monitor which stocks day traders could target next.
Separately, regulators are looking into the January price action. While the Reddit crowd has repeatedly indicated it simply likes the stock, those warier of the sudden climbs have suggested that the online communication could qualify as market manipulation.
A new report suggested that bots also played a significant role in driving the hype around the trade. Fake accounts on major social-media platforms amplified calls to buy and hold shares of GameStop and other relevant stocks, Reuters reported on Friday, citing an analysis by the cybersecurity company PiiQ Media. It was unclear how much the bots affected the rallies.
Lawmakers have taken steps to better understand the market phenomenon. The House Financial Services Committee held a hearing in February, and the Senate Banking Committee is poised to do so.
GameStop closed at $101.74 per share on Friday, up about 428% year-to-date.
AMC closed at $8.01, up 270% year-to-date.