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Why 2024 Meme Stock Action Is Much More Subdued Than 2021 – So Far
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Meme shares survived another volatility-fueled session on Tuesday.
Taking a page from the 2021 playbook, GameStop (GME) and AMC Entertainment (AMC) led the attack.
Both supporters of the meme made gains more than 74% on Monday and further doubled their share prices at Tuesday’s open – only to sell for most of the day until the close. However, after dozens of volatility disruptions, GameStop closed the day up 62%, while AMC jumped 30%.
Amidst some gentle persuasion per Keith Gill (aka Roaring Kitty)a number of names familiar to Reddit (RDDT) advice followed – companies like Koss (KOSS), Tupperware (TUP), Virgo Galactic (ESPE), Hertz (HTZ) and BlackBerry (BB).
But while the explosion in volatility rightly invites comparisons with the well-known 2021 saga that unfolded on Reddit and US stock markets, 2024 is already proving quite different.
This year, Wall Street is driving the bus.
Vanda Research crunched the numbers and reported in a note to clients that GameStop and AMC saw just a fraction of the flows experienced in early 2021. Flows for these names at the height of the early 2021 frenzy were four times the volume of Monday.
“Do we think more retail traders will be able to join the trend in the coming days? Yes. Do we think this is a repeat of 2021? No, and the chances of us reaching that stage are low,” said Vanda.
Without looking at a single stock chart, it’s easy to point out that 2021 was likely a historical aberration fueled by bored recipients of pandemic stimulus checks.
Wall Street was taken by surprise. Hedge funds like Melvin Capital were obliterated.
But institutional investors learned from the 2021 episode and are now better prepared, argues Vanda.
“These days, Quant/hedge funds are much better equipped to deal with these situations,” noted Vanda Senior Vice President Marco Iachini. “In fact, we believe the chances that they will participate alongside retail in the crisis, but also lean in and exit these negotiations before retail traders, are high.”
As of Monday’s close, the portion of share turnover in GameStop attributable to retail investors averaged 7% over the previous five days – and that number was only slightly higher for AMC. In 2021, averages and peaks were materially higher, indicating much greater participation from retail merchants.
The story continues
Options market data confirms a similar story.
But the biggest difference this year might just be the lack of a single, coherent narrative like the meme story that made headlines in 2021.
Just last week, We wrote about the recent resurgence of volatility in meme names. “In a critical break from past trading seasons, much of the recent volatility in meme stocks is being fueled by material news and fundamentals like earnings, as opposed to Reddit posts,” we wrote.
Meme Stocks Post Two-Day Jump Led by GameStop, AMC
In fact, our (unofficial) Yahoo Finance meme stock heatmap reveals impressive returns over the past two days that are mostly green across the board. But with the exception of GameStop and AMC, these daily returns are decidedly not in the triple digits they were three years ago.
In fact, the biggest names on this list – like Coinbase (COIN), Carvana (CVNA) and Palantir (PLTR) – have made their gains the old-fashioned way: around the profits and fundamentals of bitcoin.
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