The game station has triggered circuit breakers many times, with an increase of more than 80%, and the "leading brother" of U.S. stock retail investors is coming back?

Wall Street Sights

2024-05-13 22:28Posted on the official account of Shanghai Wall Street

Will the return of "Big Brother Lead" trigger a comeback of the meme stock frenzy?

At the opening of trading on Monday, the game station triggered the circuit breaker many times, rising by 54% before the suspension of trading, and the stock price once rose by more than 110% after the resumption of trading, and now the increase has narrowed to 85%.

Before the U.S. stock market, in the absence of major news, GameStop soared by more than 40%, this frenzied scene can't help but relive the fierce tug-of-war between investors and short-sellers on GameStop in the "retail war shorts" in 2021.

The catalyst for GameStop's surge was a post by Keith Gill, codenamed "Roaring Kitty", on the social media site X, where speculation about his return was rampant.

The content of the post shows a man leaning forward, holding what looks like a game controller. Some traders see this as a sign that Gill is about to start moving again. Gill's account has been dormant for a long time, and he rose to fame in 2021 when he called on short-term traders on Reddit to short GameStop.

X users were ecstatic about his return, with the post having more than 9 million views within hours of its post, and some users said that GameStop had not been sold.

While GameStop shares are far from recovering from their 2021 peaks, the stock has surged more than 70% in a month amid the latest wave of retail buying.

GameStop is still under high short pressure, doubling from 25 million shares at the end of 2021, which is equivalent to 24% of the outstanding shares, which is well above average, and the situation is similar to the big rally in 2021, when GameStop soared more than 1,600% in January 2021, bringing the meme stock boom into the public eye.

Hedge funds that shorted GameStop took a hit under the squeeze of retail investors who shorted them. Bearish pressure remains high for now, which makes it possible for GameStop stock price to continue to soar.

However, the rally could come to an abrupt end at any time, and GameStop continues to face a severe fundamental dilemma, and this surge lacks fundamental catalysts. Retail investors' enthusiasm is often unsustainable, and they can quickly embrace a single stock, but they can also quickly abandon it.

Meme stocks and other unprofitable companies have been "dormant" since the 2022 crash, largely due to tighter financial conditions due to the Fed's Powell rate hike cycle, will the upcoming rate cut cycle kick off some kind of recovery?

For now, it seems that meme stocks are making a comeback, and in addition to GameStop, the retail cinema chain AMC Cinema Chain also jumped 18% on Monday.

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