Trading chaos
The meme stock bubble bursts
Good morning, titans of trading. This is your Stock Market Rundown for May 21st, 2024. Thanks for joining me. Let’s dig in:
TODAY’S TOP STORY: SPECULATOR MANIA
When’s the last time you hit the local GameStop? Probably when you were picking up the latest Kirby title for your Nintendo Switch in 2018, right? Like most mall retailers, GameStop has been having a tough go of it.
With video game console sales in a slowdown, they’ve been cutting costs and burning cash. So if you happened to look at the “new highs” list for the New York Stock Exchange recently, you might have been surprised to see GameStop’s stock up more than 300%.
Let’s back up, because this isn’t GameStop’s first rodeo. In 2021, the company’s stock price spiked when retail investors used Reddit to orchestrate a short squeeze that led to big losses for hedge funds betting against GameStop’s stock. The Redditors’ leader: charismatic trader Keith Gill (better known online by his handle, RoaringKitty).
GameStop was volatile in the aftermath of the frenzy, but eventually sagged as the reality of its poor business fundamentals set in. That is, until last week.
Gill (or somebody using his Twitter account) returned to the internet with a series of cryptic posts. That was enough to send GameStop soaring as retail speculators piled in yet again.
GameStop’s management exploited the excitement to announce a share issuance—can’t blame them for being opportunistic. But within days the stock crashed back to near its previous levels. Lesson: never confuse meme mania with a long-term investment.
SO WHAT ELSE IS GOING ON?
Now you can yell at the TV when your team loses, even if you don’t have cable. Disney, Warner Brothers, and Fox are partnering to launch a new app-based sports streaming service.
Home Depot reported a drop in sales as customers held off on fancy home renovations, choosing instead to DIY with duct tape and Crazy Glue.
Sony unlocked the cheat code for a higher stock price as management raised its annual profit outlook and announced a stock split.
Good news for frequent flyers: new US legislation will speed up refunds for canceled flights. How about some legislation to speed up how many times the drink cart passes by my seat? One Coors Light ain’t gonna do it for five hours cooped up in Delta economy class.
Signing off for today, champions. Let’s reconnect tomorrow morning for another round. Yours in capitalism, The Axe
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