GameStop (GME) and AMC (AMC) are rising again, with both stocks up more than 100% in the past week.
While the moves send tremors through the market that feel like the meme stock mania of 2021, Wall Street strategists say this new burst of enthusiasm is a far cry from the frenzy of three years ago.
In a research note on Tuesday, Marco Iachini, senior vice president of Vanda Research, wrote that his team believes further retail interest could flow into the names in the next few trading sessions, but that the chances of a repeat in 2021 are “low ” is.
“Quantitative hedge funds today are much better equipped to handle these situations,” Iachini wrote. “We certainly believe in the chances of them participating by with retail in the pinch, but also lean into and exit these trades before retailers are high.”
The gains in both stocks, which have since been followed by several trading halts and subsequent declines in earnings Tuesday, came after the re-emergence of Keith Gill, aka “Roaring Kitty,” whose bull case on GameStop reignited the meme stock rally. in 2021.
But at this stage, market action is still far from the level of retail inflows seen in 2021. On Monday, GameStop saw net inflows of $15.8 million, while AMC attracted $37.5 million, according to data from VandaTrack. In January 2021, peak single-day inflows were $87.5 million and $170 million for GameStop and AMC, respectively.
“Both stocks have seen strong increases in inflows, but the magnitude remains a fraction of what we saw in early 2021,” Iachini wrote.
In a letter to customers Tuesday, Nicholas Colas, co-founder of DataTrek, noted the differences between this meme market moment and 2021.
“Retailers don’t just sit at home with little to do other than trade stocks,” Colas wrote. “The federal government didn’t just drop trillions in stimulus money. Yes, we’re sure we’ll hear more about meme stocks in the coming weeks, but not with the same enthusiasm as three years ago.”
With other stocks joining the rally, such as Sunpower (SPWR), which soared more than 80% on Tuesday due to a short squeeze, the looming question for investors is whether this risky environment will spread through the market and create a bubble-like atmosphere .
Colas reasons that we are not yet close to that level.
“Every bull market has its share of excesses, but this only becomes dangerous when it becomes widespread. Examples include dotcom stocks in the late 1990s and speculative small caps in 2021,” Colas wrote. “The flurry of activity around GME today is normal, even if it calls back to previous market folly.”
Chief market economist John Higgins of Capital Economics agreed that this is nothing like previous bubbles.
“Even as interest in ‘meme’ stocks recovers following a renewed surge in GameStop’s share price, some telltale signs that a broader stock market bubble is entering its final stages – such as over-indebtedness – are absent,” Higgins wrote. .
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for an in-depth analysis of the latest stock market news and events affecting stock prices.
Read the latest financial and business news from Yahoo Finance
