GameStop (GME) and AMC (AMC) fly away againwith both stocks up more than 100% in the past week.
While the movements send vibrations across the market that resemble the meme stock mania of 2021According to Wall Street strategists, this new enthusiasm is far from the madness of three years ago.
In a research note published Tuesday, Marco Iachini, senior vice president of Vanda Research, wrote that his team believed increased retail interest could flock to the names in the coming trading sessions, but that the chances of a repeat in 2021 are “weak”.
“Quant funds/hedge funds today are much better equipped to handle these situations,” Iachini wrote. “On the contrary, we believe that the chances of them participating along with retail in the squeeze, but also relying on these transactions and then exiting them before retail traders are high.
The upward moves in both stocks, which have since been followed by several trading halts and a subsequent paring of gains on Tuesday, came after the re-emergence of Keith Gillalso known as “Roaring Kitty”, whose bullish case on GameStop sparked the meme stock rally in 2021.
But at this point, 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 dollars, according to VandaTrack data. In January 2021, peak single-day inflows were $87.5 million and $170 million for GameStop and AMC, respectively.
“Both titles saw an increase in inflows, but the magnitude remains only a fraction of what we saw in early 2021,” Iachini wrote.
In a note to clients Tuesday, Nicholas Colas, co-founder of DataTrek, noted the differences between this meme market moment and 2021.
“Retail traders do not sit at home with little to do besides trade stocks,” Colas writes. “The federal government didn’t just dump trillions of dollars in stimulus. Yes, we’re sure we’ll hear more about meme stocks in the weeks to come, but not with the same fervor as we did 3 years ago. “
Other stocks also joining the rally, such as Sunpower (SPWR), which jumped more than 80% on Tuesday In a near-term tightening environment, the question for investors is whether this risk-friendly environment will proliferate across the market and create a bubble atmosphere.
Colas explains that we are not yet close to this level.
“Every bull market has its share of excess, but it only becomes dangerous when it becomes widespread. Examples include dot com stocks in the late 1990s and speculative small caps in 2021,” writes Colas. “The flurry of activity around GME today is normal, even if it is reminiscent of the market’s earlier stupidity.”
John Higgins, chief market economist at Capital Economics, agrees that this is unlike previous bubbles.
“Even if interest in meme stocks rebounds following another surge in GameStop’s stock price, some of the telltale signs of a bubble in the broader stock market could be entering its final stages – as a excessive leverage – are absent,” Higgins wrote. .
Josh Schafer is a reporter for Yahoo Finance. Follow him on @_joshschafer.
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