Home Business News GME up 74.4% on nothing more than a picture posted online

GME up 74.4% on nothing more than a picture posted online

15th May 24 9:11 am

GameStop Corporation (GME) surged 74.4% on May 13 when Keith Gill, better known as Roaring Kitty and the face of the 2021 meme stock craze, posted on X/Twitter for the first time since 2021.

The post was nothing more than a person sitting forward in their chair as if to pay closer attention. The image received more than 20 million views within 24 hours of its posting, and meme stocks rallied, although no stocks were mentioned nor was guidance provided as to what Roaring Kitty meant by the post.

The meme stocks traders seemed to view the post as “We’re back!” Whether that interpretation is correct over the long run is yet to be seen, but at least for now, meme stocks are surging.

Cory Mitchell, an analyst with Trading.biz said, “Big movement is great for traders, especially when accompanied with loads of volume. But this is hype, with the upside movement based on speculation about what a picture could mean.

These are not fundamentally strong companies, so anyone trading them must understand they could come crashing back down as soon as the buying frenzy stops. If buying into these stocks, utilize stop losses and trade upward price momentum while it lasts. It can last for a while, but don’t be holding the bag when they drop back down, like they did in 2021…and then kept dropping until recently).”

GME was seeing about five million shares in average daily trading volume. The average true range (ATR), the 14-day average dollar movement a stock moves in a day, was $0.65 at the start of the month.

Since May 3 volume has been spiking, trading above 25 million shares most days. ATR moved up to $1.63 by May 10. This was a dramatic increase in volume and volatility preceding the Roaring Kitty post. On May 13, ATR jumped to $2.99 and the stock traded 180 million shares.

GME wasn’t the only stock spiking on the news. AMC Enertainment Holdings, Inc. (AMC) jumped 78.35% on May 13. Typical trading volume is near 20 million shares per day, it spiked to 473 million.

The first Roaring Kitty post in three years was followed by several videos of seemingly random collaborations of movies, songs, and other videos. These videos may have significance to traders who were part of the meme stock community in 2021

AMC is an unprofitable company and has been for multiple years. GME was marginally profitable the past year after multiple losing years. This price spike is hype, and not based on a strong fundamental turnaround in these companies.

GME’s price/earnings ratio (P/E) is currently 873, whereas the average P/E of the largest 500 companies in the US is 27.

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