Why Is GameStop (GME) Stock Rocketing Higher Today?

  • Various meme stocks including GameStop (GME) have absolutely rocketed higher today.
  • These moves come on little news, other than an AMC preferred share dividend last week.
  • It appears the speculative fervor we saw last year isn't over, with these stocks receiving new life from retail traders.
GME stock - Why Is GameStop (GME) Stock Rocketing Higher Today?

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Thought the meme-stock frenzy had officially been declared dead? Well, today’s rally in GameStop (NYSE:GME) and other meme-stock names suggests otherwise. At the time of writing, GME stock has surged more than 10% higher on essentially no news.

Along with GameStop, AMC Entertainment (NYSE:AMC), Bed Bath & Beyond (NASDAQ:BBBY) and other retail-related meme stocks from the past have seen skyrocketing interest. AMC and BBBY stock are up 15% and 38%, respectively, at the time of writing on little news as well.

That’s not to say there’s no news at all for this meme-stock group. AMC did surge on a report last week that the company would issue preferred shares to loyal retail investors, with an appropriate “APE” ticker. Given that companies are now embracing this meme movement, retail investors are ready to take action.

Let’s dive into what to make of this crazy price action today.

Can GME Stock Head to the Moon (Again)?

With the r/WallStreetBets crowd on Reddit at it again, investors who got used to more tepid price action in these previously volatile stocks are now getting a blast from the past. It’s Q1 2021 all over again. Indeed, for traders and speculators, perhaps this latest rally could be the biggest yet.

That seems to be the hope. And as speculative fervor replaces risk-on sentiment in the market, we could be shaping up for an incredible end to what’s been an otherwise dismal 2022.

That said, as with previous meme-stock rallies, the upside these stocks can provide in the short term can be reversed just as fast. Indeed, the higher these meme stocks climb, the more risky they become. Accordingly, given the macro backdrop now facing investors, one could argue now is one of the worst times to become a speculator.

My view is that these meme stocks are untouchable right now, precisely because no one knows which direction they’re headed over any timeframe. From a fundamentals standpoint, these stocks don’t make sense. In what could turn out to be a recessionary environment, that makes these stocks ticking time bombs, in my view.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-is-gamestop-gme-stock-rocketing-higher-today/.

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