New York (CNN Business)Meme mania has returned to the stock market with a vengeance.
Shares of movie theater chain AMC (AMC), video game retailer GameStop (GME) and struggling home furnishings retailer Bed Bath & Beyond (BBBY) soared Monday, extending last week’s big gains.
AMC was up 16% and has now spiked 70% in just the past five trading days while Bed Bath & Beyond shot up 40% Monday and has more than doubled in the past week. GameStop rose 12% Monday and has gained 30% in the last five days.
What’s going on? All three consumer stocks have rabid followings among individual investors on Reddit and other social media sites. These investors are hoping to punish professional hedge funds and big institutional firms who have bet against these stocks by short-selling them. Short sellers profit when a stock goes down.
This army of traders has galvanized on Reddit to support these so-called meme stocks —even though there are serious questions about the companies’ fundamentals. All three firms are expected to lose money this year and next.
Streaming media services and gaming downloads pose challenges for AMC and GameStop. Bed Bath & Beyond just ousted its CEO following less than three years on the job after the company reported lousy results in June.
But none of that matters to the “apes” on Reddit, a nickname that many meme stock fans have adopted for themselves. GameStop and AMC also seem to relish their underdog status.
GameStop chairman Ryan Cohen, who also founded online pet retailer Chewy (CHWY), tweeted after GameStop announced a new NFT marketplace in July that the “left for dead retailer just launched something new.” The tweet ended with the flushed face emoji. 😳
Cohen’s RC Ventures firm is the top investor in GameStop and also has recently bought a big stake in Bed Bath & Beyond.
AMC is taking its appreciation for the apes one step further. The company announced earlier this month that it plans to reward shareholders with a special dividend to be paid in the form of an AMC Preferred Equity unit, a new class of stock that AMC has applied to list on the New York Stock Exchange under the ticker symbol “APE.”
AMC CEO Adam Aron said in a press release that the company is “rewarding and recognizing our passionate and supportive shareholder base.” AMC also intends to issue an “I OWN APE” NFT exclusively to those investors.
Even as short sellers continue to circle these meme stocks, the apes may have the upper hand for now.
AMC shares are down 5% this year. That’s not as bad as the broader market and is a relatively small loss considering the stock soared nearly 1,200% in 2021. GameStop is up more than 20% in 2022, following a nearly 700% pop last year. Bed Bath & Beyond is still down more than 20% on the year, though, despite the recent surge.
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