NEW YORK (AP) – After feeling the thrill of victory early this year by singlehandedly causing GameStop’s stock to soar – only to get crushed when it quickly crashed back to earth – armies of smaller-pocketed and novice investors are back for more.
These undaunted investors have resuscitated GameStop shares back above $300, up from $40 in February after plunging from a peak of $347. They’re also hauling new stocks onto the bandwagon they say is heading for the moon, including the lesser-known health insurance company Clover Health Investments.
This second wave of leaps for meme stocks are just as staggering – the movie theater chain AMC Entertainment soared to $62 last week from $2 early this year – and once again professional Wall Street is calling the gains illogical. Many of these professionals had predicted the phenomenon of regular, small-fry investors piling into a stock en masse and sending it incredibly higher would fizzle out, particularly after they felt the pain of losing some money.
Instead, the frenzy has endured and shows how powerful these investors remain, at least for now. They’re armed with social media where they can convince others to champion the same stocks. They also have zero-fee trading apps that allow many to buy stock options, which can offer bigger gains at a smaller upfront cost than buying a share of stock, in exchange for potentially bigger percentage losses.
“They’ll do surprising things if given the tools,” said Hossein Azari, CEO of cmorq, a company that helps customers get into cryptocurrencies and advocates for a new world of “decentralized finance.”