Meme-Trading Spikes as Stock Indexes Post Moderate Gains

03 Jun 2021 · 3rd Party Analysis

Meme-Trading Spikes as Stock Indexes Post Moderate Gains


In Summary

  • Stocks edge higher as the action appears in a handful of stocks popular with retail traders
  • AMC Entertainment is on a tear, up 95% on Wednesday

Major US stock benchmarks continued their upward move on Wednesday as traders and investors remained optimistic that the future outlook on the economic recovery will be strong, regardless of inflation pressures. Still, investors seem to bet less risky than in previous sessions due to the lingering threat that higher prices could potentially buffet the market.

Stocks across the board traded in a largely subdued manner on Wednesday but still managed to gain enough momentum to log another day in the green. The Dow Jones Industrial Average climbed moderately, up 25.07 points, or 0.07%, to 34,600.38. The S&P500 finished the day higher by 6.08 points, or 0.14%, to 4,208.12. The tech-heavy Nasdaq Composite advanced 19.85 points, or 0.14%, to end the session at 13,756.33.

Investors continue to sway between betting on economically sensitive stocks poised to gain from the economic reopening or plow into growth stocks which have been particularly hurt the past few months amid concerns that higher prices will reduce the worth of future earnings. On the other hand, value stocks, positioned to appreciate as consumers and business begin to spend more, are subject to how much farther the economic recovery will go and whether the rebound in activity will sustain the upside momentum.

The hunt for bargains in growth and value stocks, however, was not the main driver to narrate trading on Wednesday. More than 710 million shares of AMC stock exchanged hands yesterday, making the movie-theatre company the most actively traded stock on Wall Street. Retail investors were behind the spectacular rally that lifted AMC’s share price 95% higher on the day, and more than 120% at its session high.

Free Popcorn to Lure Investors

AMC executives, in an attempt to lure the retail-trading army, promised free popcorn and exclusive screenings to those who purchased the stock. AMC announced on their website the launching of a new platform called Investor Connect just for its new retail investors.

The move by AMC led to a stampede among amateur traders who quickly piled into the company’s stock, propping its price to levels near $75. By comparison, a single AMC share was worth just $2.01 at the beginning of the year. The company’s value has grown over 3,000% year-to-date, hitting a closing price on Wednesday of $62.55. The percentage increase so far in the year makes it the best-performing stock on the US market.
Just a few short months ago, in December, AMC warned of a possible bankruptcy unless enough investors bought into the stock to throw the company a lifeline so it could survive the Covid-19 pandemic.

The jaw-dropping ascend in AMC was joined by gains in other meme-stock favorites. GameStop and BlackBerry were also on a tear. Shares in GameStop popped 13.34%, or $33.22, to end trading at $282.24. BlackBerry spiked 31.92%, or $3.69, to close $15.25 a share.

AMC, GameStop and BlackBerry were among the most favored meme-stocks during the dizzying retail-fueled rally in January this year. During that time, GameStop was at the forefront of the rally, shooting up 1,900% in roughly two weeks.

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