GameStop (GME) and AMC (AMC) are surging again, with both stocks up more than 100% over the past week.
These moves are sending the entire market into a 2021 meme stock mania-like ripple, but Wall Street strategists say this new outburst is a far cry from the frenzy of three years ago.
Marco Iachini, senior vice president at Vanda Research, said in a research note on Tuesday that while these stocks could see more retail interest in the next few trading sessions, the same could happen in 2021. wrote that the team believes it is “low.”
“Today's quants/hedge funds are much better equipped to handle these situations,” Yachini wrote. “If anything, we believe they are more likely to participate.” parallel Retail trade is tight, but they are also likely to lean into and exit these trades before retail traders. ”
The rally in both stocks, which was followed by several trading halts and a subsequent decline on Tuesday, came after the re-emergence of Keith Gill, also known as “Roaring Kitty,” who is bullish on GameStop. The lawsuit sparked a backlash in meme stocks. In 2021.
However, at this stage, the market movement is still far from the level of retail inflows in 2021. GameStop had $15.8 million in net inflows on Monday, while AMC had $37.5 million, according to VandaTrack data. The highest daily inflows in January 2021 were $87.5 million and $170 million for GameStop and AMC, respectively.
“Both stocks have seen a surge in inflows, but the magnitude is only a fraction of what we witnessed in early 2021,” Yachini wrote.
Datatrek co-founder Nicholas Colas addressed this meme market moment and what's different in 2021 in a note to clients on Tuesday.
“Retail traders don't just sit at home with nothing to do but trade stocks,” Collas wrote. “The federal government hasn't just jettisoned trillions of dollars in stimulus money. Yes, I'm sure we'll be hearing more about meme stocks in the coming weeks, but not with the same enthusiasm as three years ago.”
Other stocks like SunPower (SPWR) joined in the rally, surging more than 80% on Tuesday amid a short squeeze, but the pressing question for investors is whether this risk-on environment will spread across the market and create a recession. is. A bubble-like atmosphere.
Mr. Colas reasoned that he is not at that level at the moment.
“Every bull market has excesses, but they only become dangerous when they become widespread. Examples include the dot-com stocks of the late 1990s and the speculative small-cap stocks of 2021.” Mr. Colas wrote. “The disruption in activity around GME today is normal, even if it brings back previous market folly.”
John Higgins, chief market economist at Capital Economics, agreed that this is unlike previous bubbles.
“Even if GameStop's stock price soars again and interest returns to 'meme' stocks, there are clear signs that a broader stock market bubble is entering its final stages, including overleverage. Some are missing,” Higgins wrote. .
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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