Meme stock fervor continues in premarket trading as GameStop ( $GameStop Corp. Class A GME$ ) shares surge over 24%, following a 60% rise in the previous session, totaling approximately a 540% increase since the beginning of May. Faraday Future ( $FARADAY FUTURE INTELLIGENT ELEC INC FFIE$ ) experienced a premarket spike exceeding 84%, building on a staggering 367% gain on the previous day. AMC Entertainment ( $AMC Entertainment Holdings, Inc. Class A AMC$ ) also enjoyed a further premarket ascent of over 20% after Tuesday's explosive rally of over 30%.
The backdrop of the Rally:
Data reveals that at the start of 2021, GameStop's share price was meandering at lower levels. Consequently, some hedge funds established significant short positions, betting on further stock value decline. Members of the WallStreetBets forum on Reddit took notice of this situation, initiating discussions and purchasing GameStop's stocks and options, thus pushing the price upwards. Keith Gill, known by his Reddit account "Roaring Kitty," gained considerable attention as he posted screenshots of his bullish options positions in GameStop and expressed his belief in the stock being severely undervalued.
Gill's actions and comments garnered the attention of many retail investors. These individual traders began to collectively buy into GameStop, triggering a powerful short squeeze, catapulting the stock price upwards and initiating a series of short squeezes, which even led to significant losses for some Wall Street hedge funds. For instance, Melvin Capital, which held large short positions in GameStop, suffered multibillion-dollar losses during the squeeze.
On Monday, after a three-year hiatus, Keith Gill returned to the social media platform X. Posting under the username "Roaring Kitty," Gill shared his first post since June 2021. The post featured an image of a man leaning forward in his chair—a meme popular among gamers, suggesting that serious developments are afoot. Some traders interpret this as a sign that Gill might be gearing up for action once again.
Disclaimer:
The content is provided as general information only and should not be taken as investment advice. All the contents shall not be taken as a recommendation to buy or sell any security or financial instruments. Any action you take resulting from information, analysis, or commentary on this article is your responsibility. Please consult your investment advisor before making any investments.
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