Back in 2021, GameStop and AMC shocked the trading world when retail traders communicating on YouTube and online forums like Reddit’s ‘WallStreetBets’ began investing heavily in the companies, leading to a surge in stock prices and the coining of a new term — Meme Stocks.
Despite the companies’ weak fundamentals at the time and changes in people’s entertainment habits, the meteoric rise in their stock prices shook up the market, befuddled the U.S. Securities & Exchange Commission (SEC), and even led to a Netflix documentary about the phenomenon.
Now it looks like Meme Stocks are back in a big way, and it may all be due to one financial analyst/influencer who goes by the name ‘TheRoaringKitty’ on X.
After nearly three years of silence, The Roaring Kitty, also known as Keith Gill, took to the social media platform this Sunday to post a picture of a person sitting upright in a chair presumably playing a video game. Then on Tuesday, the influencer with over 1.2 million followers on X, posted a clip of the movie “Braveheart” with the word “GameStop” flashing on the screen.
The posts and return of Gill, who was a major catalyst behind the 2021 movement, appears to have inspired traders to revive their antics of pumping Meme Stocks — the name given to unconventional companies that have attracted cult-like followings among retail traders.
The results are staggering. On Tuesday, GameStop surged around 60%, after rising 74% the day before. AMC Entertainment also went up 32% on Tuesday. In May alone, GameStop’s share prices have already risen 283%, and AMC Entertainment rose 137%, respectively. As is the case with Meme Stocks, the surge in stock prices appear to have come without any tangible changes to the companies’ business model or plans.
One journalist and climate tech investor, Molly Wood, went as far as to say that “there’s an argument to be made that RoaringKitty is actually running this company [GameStop] right now. He is driving them toward a strategy that might be successful in the long term.”
What happened with Meme Stocks in 2021?
To understand what’s happening now, it helps to reconsider the events of 2021 that reshaped the trading world. Back when the globe was still in the middle of a pandemic, GameStop, a video game retailer, and AMC, a once-popular movie chain, were both struggling, and many traditional investors were betting on their demise.
That’s when a band of rogue retail traders came together using online forums, particularly Reddit’s WallStreetBets, to rally support for the companies and drive up their share prices. While many considered the coordinated buying efforts of these traders to be a form of market manipulation and called for regulatory oversight, the traders were not technically doing anything illegal.
In retrospect, the Meme Stock craze was (and is) driven primarily by two factors. The first, the age-old desire for investors to get rich quickly. As folks on the sidelines watch traders pulling in returns in the thousands of percent on short-term trades, many enter the market out of fear of missing out (FOMO).
But the second cause is perhaps more interesting. The online forums where retail traders plan their next move foster a sense of community. They are also comprised of people who want revenge against institutional investors and short sellers (people who bet on the price of a company’s stock to go down). In other words, there is an Us vs Them/David vs Goliath dynamic at play, as well as a sense of rebellion and the desire to shake up the status quo that’s fundamental to the movement.
GameStop Partners with Pudgy Penguins
On Monday, Pudgy Penguins took to X to announce that Pudgy Toys, physical toys based on the popular collection’s penguin avatars, are now available in GameStop. Several X accounts commented about the great timing of the partnership, coming just as a resurgence in GameStop’s stock price is making national headlines.
There’s no doubt that there is overlap among degens, Web3 natives, and the Meme Stock crowd. This relationship could be poised to strengthen in the months and years to come, especially given that GameStop has embraced Web3 since its 2021 comeback. Over the past few years, GameStop has initiated several Web3 projects, including an NFT collection with Illuvium, a partnership with Immutable X, and a $100 million fund to promote gaming NFTs, among others.
The recent partnership with Pudgy Penguins, a collection that has been having a breakout year in 2024, could further cement the connection between Meme Stocks and Web3. It’s also a move that could bring GameStock real value in the future. Although, if we’ve learned anything from the Meme Stock mania, it’s that true value and fundamentals are not the primarily concern of investors in the space.