Although meme stocks put on quite a show on Thursday, some of them have now crashed, failing to hold on to the heave price swings.
Meme stocks had quite a field day yesterday and rallied quite impressively, seemingly making their May price movement more palatable. Even disregarding yesterday’s pump, most of these stocks have been doing interesting numbers over the past few weeks, with some analysts boiling the spike down to fear of missing out (FOMO). Some of the stocks include AMC Entertainment (NYSE: AMC), GameStop (NYSE: GME), BlackBerry (NYSE: BB), and Wendy’s (NASDAQ: WEN).
Over the last month, WEN had the smallest jump, climbing only 4.36%. GameStop saw a 33.98% jump in the same period, with BlackBerry climbing 74.94%.
Even though it has lost 10.64% over the last 5 days, AMC’s rise is the highest of the meme stocks as it has put on 229.82% more weight in one month. Other figures for the entertainment company are also interesting. In the last 3 months, AMC rose by 283.60%, and 626.83% in one year. Currently at a premarket figure of $44.13, the stock has jumped a whopping 1,919.34% since January.
Meme Stocks and Crypto
While some have said FOMO is the reason for the recent jump, others have suggested a different root cause. According to The Daily Shot newsletter editor, Lev Borodovsky, the rise in stocks is a continuous motion that swings back and forth from the crypto market. He said:
“We continue to see the rotation out of crypto and back into stocks favored by the Reddit crowd. [I] noticed this connection a couple [of] months ago.”
Bitcoin has had a rough time recently, dragging most of the crypto market down with it. Although currently trading at $37,000, the king coin hit $64,000 back in April.
According to popular analyst and Quantum Economics founder, Mati Greenspan, the rise in the value of meme stocks might be unreasonable. Greenspan didn’t ascribe it to FOMO but suggests that it might be because of traders who are a little too excited.
“Meme stocks are rising beyond their reasonable valuations based solely on the retail enthusiasm of investors who are often in it more for the lulz than to make a buck,” said he.
All of the excitement with the meme stocks eventually dissipated on Thursday. For instance, both GameStop and AMC Entertainment suffered double-digit losses, shedding a lot of the weight they gained earlier. While GME fell by 27.2%, AMC lost 13.2%. Losses were also seen with other meme stocks such as Clover Health (NASDAQ: CLOV) and Clean Energy Fuels (NASDAQ: CLNE). CLOV lost 15.3%, while CLNE crashed 15.6% after its Wednesday rise of 31%.
Stock runs fueled by Reddit seem to be strong enough factors for increase, however shortlived. According to CNBC, Reddit stock runs last nine days on average, from the beginning to the first big drop of the initial hysteria.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.