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A tweet from the now-famous Youtuber Roaring Kitty was enough to breathe new life into so-called meme stocks. Game store chain GameStop closed the first trading day of the week more than 70 percent higher. The movie chain AMC Entertainment gained nearly 80 percent.

In the news: Meme shares shoot up sharply again.

  • GameStop ended the trading day yesterday 74.4 percent higher at $30.45. At first glance, there appears to be no end to the boom today. Pre-exchange, the chain is trading about 50 percent in the plus.
  • AMC Entertainment also has the wind in its sails. The cinema chain shot up 78.3 percent yesterday. A share then traded at $5.19. Pre-exchange, the company is adding another 55 percent.

Details: Those shares are regaining popularity due to a tweet by Keith Patrick Gill, better known on social media by his pseudonym RoaringKitty.

  • In the tweet, we see an image of a man leaning forward. In the gaming world, that pose is associated with someone "shooting into action." For meme investors, that was enough to buy shares of GameStop and AMC Entertainment en masse.
  • Meanwhile, RoaringKitty continues to bombard the social media platform with cryptic tweets. These stand out all the more since he hasn't published anything on the platform since June 2021.

Shorts squeeze GameStop

Recap: Is this a repeat of what happened during the first month of 2021? Back then, all eyes were on Roaring Kitty and GameStop as well.

  • The chain's share price had skyrocketed some 2,400 percent in a short period of time. On Jan. 27, the stock was worth as much as $347.5, up from $4.7 on the last day of 2020.
  • The goal then was to price the shorters out of the market, and with success. The boom was so substantial that some leveraged funds ran into trouble. Melvin Capital was the biggest loser then. That fund saw more than 50 percent of its value go up in smoke in January.
  • Along with GameStop, several other stocks shot up during that period, including AMC Entertainment.

So: Is there another short squeeze?

  • That possibility exists. According to financial services data, 29 percent of GameStop shares were on loan on Friday.
    • Shorters borrow shares only to sell them immediately. The goal is to buy them back cheaper later. The difference between the selling and buying price is profit for them. So in this way they speculate on a fall in the price.
    • By comparison, as much as 140 percent of GameStop shares were shorted in January 2021. That means some lent shares were re-lent by other parties.
  • S3 Partners, a company specializing in financial data, reports that investors shorting GameStop have already lost $1.24 billion this month (including May 13). "The latest boom is forcing shorters to close their positions, which is having an upward effect on the stock price," Ihor Dusaniwsky of S3 Partners told U.S. news site CNBC. "But for other shorters, $30 could be an interesting entry point."

What do the numbers say?

Details: GameStop on March 26 released its annual results for the fiscal year 2023 that ended in February.

  • Sales were $5.27 billion, up from $5.92 billion a year earlier.
  • The chain posted a net profit of $6.7 million. In 2022, there was still a net loss of $313.1 million.

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