Meme stock GameStop jumped nearly 40% today as the video game retailer's first profitable quarter in two years squeezed bearish investors and ignited a surge in other stocks popular among retail traders.
AMC Entertainment Holdings gained 3.4%. AMC and GameStop were at the heart of a meme-stock frenzy in 2021 driven by small investors coordinating on social media.
Among other highly shorted meme stocks, Koss Corp climbed 9.5%, Bed Bath & Beyond reversed course to slip 1.3%, while the Roundhill MEME rose 4.2%.
Grapevine, Texas-based GameStop, in which billionaire investor Ryan Cohen holds a majority stake and serves as chairman, recorded a 16% decline in costs during the quarter and surprised Wall Street analysts with a profit.
Investors saw this as an early sign of turnaround for GameStop, whose core business of selling new and pre-owned videogame disks is shrinking as consumers move to downloading games digitally or streaming.
GameStop was the second most traded US stock among retail punters, according to JPMorgan.
The stock hit its highest level in more than four months with 45 million shares changing hands by 11:35 am ET, among the top five most traded US stocks.
"Luckily, this go around is not due to meme investors, but an actual tangible fundamental event," said David Wagner, portfolio manager at Aptus Capital Advisors.
Not everyone was convinced, however.
The share surge "looks to be the result of good cost control rather than top-line growth, which is not ideal", said AJ Bell Investment Director Russ Mould.
"Crypto, meme stocks, IPOs, SPACs and other, speculative assets all peaked a long time ago and the easy-money frenzy of 2020-21 now looks like an aberration on price charts, not the start of a brave new world."
