"The meme stock phenomenon appears to have been reignited by a recent social media update from “Roaring Kitty.” The man, whose legal name is Keith Gill, posted a picture on the X platform of a video gamer sitting forward on their chair — a meme used by gamers to indicate they are taking the game seriously.
"It marked Gill’s first post on the platform since 2021, and it has since been viewed more than 23 million times. Gill has followed up his return to the X platform with a series of posts of short videos from popular TV shows and movies, although the meaning behind them was unclear.
"Gill is a former marketer for Massachusetts Mutual Life Insurance. Also known as DeepF------Value on Reddit, he drew an army of day traders who cheered each other on and piled into the brick-and-mortar video game stock and in GameStop call options between 2020 and 2021." -- CNBC
It only took one tweet to revive the meme stock rally of yesteryear.
A simple post from user Roaring Kitty, followed by a series of memes from movies that amount to a hype video like the ones used by football teams before big games, galvanized the long-dormant army of retail investors and sent shares of GameStop and AMC into the stratosphere.
Obviously, this unexpected blast from 2021 raises questions. First, why is it coming back? It isn't just for nostalgia. There's a certain targeted ruthlessness in which stocks get chosen, and it's most likely related to how much short interest there is on the shares. If lots of hedge funds are betting against a stock, that makes it a good rallying point for meme investors.
Second, why is it happening now? There's no obvious answer here, though GameStop had already rallied from April lows before this week. Perhaps the meme investors have returned when we least expected it. Interest rates are much higher than they were back in 2001, there's a lot less pandemic savings sloshing around in bank accounts.
However, note that the timing of the new meme rally comes right after crypto assets fell back heavily after hitting record highs. Perhaps there's an overlap between those who buy Bitcoin and GameStop.
Third, what does it all mean? Well, a couple of things. It suggests there's still resentment against the investing establishment -- those hedge funds that were shorting the stocks. Also, it shows regulators are probably powerless to prevent this kind of uncoordinated action in the market. It's hard to call it manipulation when it's a hive mind that's pulling the strings.
There could be wider implications. The Federal Reserve probably won't like it. It suggests financial conditions are still too loose, and that interest rates need to stay even higher for even longer. That's not what the market wants. -- Marketwatch
