Opinion: GameStop shares soar 30%, giving other meme stocks a ride after Reddit poster touts shares at a 58.2% discount

The thing about meme stocks is that sometimes they move like meme stocks.

shares of GameStop GME,
and AMC Entertainment AMC,
shot up Tuesday and helped create a blueprint for related names like Bed Bath & Beyond BBBY,
and Hycroft Mining Holding Corp. HYMC,
featuring new and old meme names that appear to be benefiting from the uptick in retail investors on Reddit.

While the trading day resulted in GameStop Chairman Ryan Cohen and AMC CEO Adam Aron’s growing meme portfolios, it was a morning move at GameStop that seems to have sparked the spending spree.

A Reddit post by user Thump4, published on subreddit WallStreetBets early Tuesday morning, suggested that shares of GameStop are trading at a discount of 58.2% to their 15-month fair value.

Thump4 used a chart of the stock’s implied volatility and some options forecasts on contracts that suggested a call-to-put ratio of almost 2 to 1 by 2024. The post also aims to show that GameStop’s price had already hit a double bottom in 2022.

Thump4 pointed to growing option activity at GameStop as a possible signal that short interest had peaked, alluding to a larger thesis that GME’s 15-month price target is $225 per share.

The stock closed at $94.20 on Monday, but after the Reddit post garnered a few thousand upvotes, GameStop stock became the beauty of Tuesday’s market ball, closing up 30.7% on the day at $123.15 , which brought them closer to Thump4’s target price.

A little less than 14 million shares of the video game retailer were also traded that day, which is more than four times the daily average volume. The last time GameStop stock trading was this hectic was in August 2021, according to Dow Jones data.

“The post was on our radar in premarket as it was the most upvoted and most talked about post on WallStreetBets,” said Ivan Cosovic, founder of Breakout Point, a data group focused on meme stocks. “Maybe it started snowing. It happens with OG meme stocks.”

Regardless of what else might have sparked the big move at GameStop, a broader surge was taking place in a sector of meme stocks.

As is often the case, the pump at GameStop led to a surge in AMC shares, which closed up 15.1% on the day after CEO Adam Aron spent the twilight hours leading up to the meeting insulting haters of his recent investment in Hycroft Mining. a gold and silver mining company in northern Nevada.

“So amusing. Narrow-minded people call our Hycroft investment…”stupid”…”idiotic”” Aron tweeted at almost 3 a.m. EST. “AMC understands so much about raising cash and deleveraging… Add to that a very low price for our stock/warrants. Tons of crows are eating ahead and it won’t be from me! #Haha

Aaron Added to this tweet a few minutes laterand ponders how his quotes match the misattributed quotes of a decapitated French queen.

Whether or not readers tweeted Aron in a powdered wig eating tiny pastries, Hycroft shares rose nearly 5.7% on the day of the action, nearly triple their daily volume.

Much of this move took place in 20 minutes between 11:30 a.m. and 11:50 a.m. Eastern, during which Hycroft climbed 19.2%. After hours, the stock was up as much as 13%.

HYMC was hyped on social media by AMC “Apes,” who made it clear they see the two stocks as inseparable.

Speaking of connected, GameStop’s 30% move also appears to have impacted shares of Bed Bath & Beyond, which climbed as high as nearly 5% before closing on the day on underperforming volume of around 2.3%.

Homewares retailer BBBY is the latest company to be targeted by GameStop chairman Cohen, also an activist investor. The move has continued to draw attention on social media.

Ortex data showed that short interest in GameStop rose nearly 9% on Tuesday, while short positions in AMC rose 11%. The same data showed short interest in BBBY, down 0.7% on the day.

As for Hycroft, the shorts increased overall free float short interest by 19%, raising hopes that a new retail short squeeze is on the horizon.

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