The meme stock frenzy of 2021 has made a comeback, with shares of troubled retailers Bed Bath & Beyond and GameStop, as well as cinema chain AMC Entertainment, soaring in recent weeks. This revival echoes last year's speculative mania, when Gen Z and millennial investors drove GameStop shares from $3.25 in April 2020 to $347.50 in late January 2021.
This time, however, the rally is not solely fueled by retail traders. Dueling hedge funds are also playing a role, according to analysts. Between late July and early last week, Bed Bath & Beyond shares more than doubled, while AMC and GameStop saw gains of around 25%. The moves come despite weak fundamentals: Bed Bath & Beyond was downgraded by Baird days before its surge.
Baird analyst Justin Kleber described the surge as driven by 'non-fundamentally focused market participants'. Ihor Dusaniwsky of S3 Partners noted that larger retail investors, rather than Reddit board traders, are behind the movement, with many jumping in due to fear of missing out.
One sign this rally differs from the past is the decline of Robinhood, the favoured platform of meme traders. Its active users have fallen from 22 million to 14 million, and its stock now trades around $10, down from nearly $60 a year ago. Last week, Robinhood announced it would lay off 23% of its staff.
