Meme Stocks Are Going 'To the Moon' Again. How Long Can the Party Last?

🌈 Abstract

The article discusses the recent resurgence of "meme stocks" like GameStop and AMC, driven by the return of influential Reddit user Keith Gill (known as Roaring Kitty). It explores the implications of Gill's cryptic social media posts, the regulatory scrutiny around the meme stock phenomenon, and the uncertainty around whether retail investors can replicate the same level of success as in 2021.

🙋 Q&A

[01] Meme Stocks Resurgence

1. What triggered the recent surge in meme stocks like GameStop and AMC?

• The article states that Keith Gill, known as Roaring Kitty, emerged from a social media retirement of almost three years and shared a wordless meme, which was enough to trigger a bull run on GameStop shares.
• Gill's cryptic posts, including movie clips and references, helped juice the GameStop stock by more than 370%.

2. How does the current meme stock rally differ from the one in 2021?

• Unlike the previous rally, Gill has not explicitly explained why he thinks GameStop is a good investment or even mentioned the company by name.
• He is communicating in "pop-culture code" using edited movie and TV clips, rather than making direct statements about the market or meme stocks.

3. What are some of the concerns around the meme stock phenomenon?

• Former SEC Chair Jay Clayton expressed frustration with the meme stock trend, likening it to "gambling" and arguing that retail investors are putting themselves at significant risk.
• There are questions about whether Gill's cryptic tweets could be considered manipulative, even if they are not illegal.

[02] Uncertainty Around Sustainability

1. What are some factors that suggest the current meme stock rally may not be sustainable?

• Many investors who held onto their GameStop and AMC shares during the previous downturn may be looking to sell and profit or cut their losses during this rebound.
• Some skeptics in the Reddit communities are predicting a "bubble" that won't last long.
• Gill has not disclosed his current stake in GameStop, leaving open the question of what he stands to gain from the recent fluctuations.

2. How do the article's authors view the potential for a "triumphant sequel" to the 2021 meme stock saga?

• The article suggests that sequels often disappoint, and there is no indication that this one will be different.
• The authors caution that meme stock traders should know that "for everyone who reaches the moon, there's someone else crashing down to earth."