Why the Return of the Meme Stocks May Have a Different Ending This Time Around
Meme stocks have returned to Wall Street yet again, resulting in companies like GameStop and AMC seeing their stocks rise.
Though there are many similarities between these meme stocks and what occurred in 2021, analysts have already stated that this time around, things will likely be different.
What Is a Meme Stock?
A stock can become a meme stock when it becomes highly popular thanks to how novice investors discuss it on social media.
![A close-up of a phone open to GameStop stock](https://images.savvydime.com/2024/05/7051d64c-michael-fortsch-siz6izqkxzs-unsplash.jpg)
Source: Michael Förtsch/Unsplash
Often, these investors will post about the stock by using memes and collaborating with others on social media sites like Reddit. These traders will then get behind a particular company, such as GameStop, and boost their shares.
The Beginning of Meme Stocks
Meme stocks first became part of American culture in the beginning months of 2021, when many investors began buying stock in GameStop.
![A phone and computer open to GameStop’s stock graph.](https://images.savvydime.com/2024/05/1bc5da16-dimitris-chapsoulas-cqft1j8ig30-unsplash.jpg)
Source: Dimitris Chapsoulas/Unsplash
Many online people, such as a person who goes by the name Roaring Kitty on the internet, became central personalities that influenced many to buy GameStop stock.
The Meme Stocks Are Back
Now, it appears that these meme stocks are back. Just this week alone, GameStop has seen a drastic rise, as it jumped about 60.1% on Tuesday. This jump came after Monday’s 74% rise.
![A person holding their phone open to their investing profile and graph.](https://images.savvydime.com/2024/05/cd3aeb7b-piggybank-sk-ziqvkgsk-unsplash.jpg)
Source: PiggyBank/Unsplash
Meanwhile, AMC Entertainment, another meme stock that did well in 2021, has also seen a rise on Wall Street after having jumped by 32% on Tuesday.
Regular Buying
This sudden buying of GameStop shares may seem like a huge shock to regular investors and buyers. After all, normally people only buy stock when they feel it is at a price that is equivalent to how much money the company is actually generating.
![A close-up look at the New York Stock Exchange building in the daytime.](https://images.savvydime.com/2024/05/0a01a5bd-tommao-wang-nft24qofdao-unsplash.jpg)
Source: tommao wang/Unsplash
However, that conventional practice is often thrown out of the window when it comes to meme stocks, as we can currently see with the surge in GameStop share buying.
Buyers Will Pay for GameStop Shares
Now, it appears that there is such a huge momentum to buy GameStop shares, which has resulted in many traders doing exactly that.
![A close-up of a stock market graph on a laptop.](https://images.savvydime.com/2024/05/743c5a0d-tech-daily-ztymiqecyh4-unsplash.jpg)
Source: Tech Daily/Unsplash
Buyers are willing to pay higher prices for these shares of GameStop. This sudden activity comes after a quiet week on GameStop’s end. The company has not revealed anything new that would cause this massive activity to take place on the stock market.
Roaring Kitty’s Return
Many have pointed to the return of Roaring Kitty as why these meme stocks have jumped in price on the stock market, similarly to how they did in 2021.
![A close-up of a monitor that has a stock market graph on it.](https://images.savvydime.com/2024/05/efc4f164-nicholas-cappello-wb63zqj5gne-unsplash.jpg)
Source: Nicholas Cappello/Unsplash
Roaring Kitty hasn’t posted anything since June 18, 2021. However, this past Sunday evening, Roaring Kitty posted a picture of a person playing a video game and lounging about — and then suddenly becoming alert.
People Rush To Buy GameStop
This sudden reappearance of Roaring Kitty led many social media users and traders to declare that they were going to buy GameStop shares once again.
![A close-up of a sign on the New York Stock Exchange by American flags.](https://images.savvydime.com/2024/05/8f0bfec7-teleterapia-fi-dc__qslnhoa-unsplash.jpg)
Source: teleterapia.fi/Unsplash
This online fervor only gained more traction when people shared the profits they were making by trading their GameStop stock.
Incredible Stock Market Activity
While some people may not think these meme stocks are anything important, the major activity seen on the stock market would prove them wrong.
![A look up at the New York Stock Exchange building with American flags out front.](https://images.savvydime.com/2024/05/8505de93-aditya-vyas-6ih4uoqzaas-unsplash.jpg)
Source: Aditya Vyas/Unsplash
GameStop’s share price was rising so sharply on Monday that trading of the stock had to be halted nine times in just one hour. Meanwhile, AMC Entertainment’s trading on Tuesday had to be halted 18 times by the afternoon.
2024 vs 2021
While much of what we’re seeing this time around has been similar to what we saw in 2021, financial analysts have stated that there are some major differences to note.
![A person holding their phone open to their investing profile.](https://images.savvydime.com/2024/05/871070d8-tech-daily-lkyv7faumza-unsplash.jpg)
Source: Tech Daily/Unsplash
For example, investors were able to pump $15.8 million into GameStop and $37.5 million into AMC on Monday. While these are large amounts, it’s very small compared to what was seen in 2023, which saw $87.5 million and $170 million pumped into these two companies.
These 2024 Meme Stocks Won’t Reach 2021 Heights
Because of this, many analysts don’t believe that we’ll see these meme stocks reach the massive heights that were experienced in 2021.
![A laptop near books open to a stock market graph.](https://images.savvydime.com/2024/05/13b7de02-yorgos-ntrahas-mcauhlgirvs-unsplash.jpg)
Source: Yorgos Ntrahas/Unsplash
Another major difference revolves around the fact that GameStop has about 305.9 shares trading on the market — much more than what it did in 2021. This will likely lessen the opportunities of seeing a short squeeze.
Wall Street Has Learned From 2021
These meme stock activities also are occurring on a Wall Street that remembers what happened in 2021. For many, this is familiar. They aren’t facing something they’ve never seen before, as they did in 2021.
![A close-up of a Wall Street sign on a post outside.](https://images.savvydime.com/2024/05/7f698cef-sophie-backes-umfgom67w48-unsplash.jpg)
Source: Sophie Backes/Unsplash
Therefore, analysts have stated that Wall Street will likely be able to understand and digest some of these manic movements seen during trading in yet another difference from 2021 to now.