Could the meme craze of 2021 be making a comeback? This question arises after shares of the popular meme stock GameStop (NYSE: GME) have surged 66% month-to-date on no fundamentally changing news. Instead, the move appears to be driven by retail speculation, which has returned in droves as the stock surges higher.
As the market approaches its 52-week high, could the increase in speculation and appetite for risk result in a secondary meme craze? That question remains to be answered; however, with several meme stocks currently soaring higher and possessing significant short interests, the impressive month's gains might not be short-lived.
So, let’s look at some popular meme stocks in the current cycle and unpack their performance along with key factors that might result in a higher potential squeeze—starting with the leader, GameStop.
GameStop Corp.
The meme stock craze of 2021, led by GameStop and AMC Entertainment (NYSE: AMC), saw retail investors from online forums like Reddit's WallStreetBets challenge institutional short-sellers, causing a significant short squeeze and sparking debates on market manipulation and finance democratization. This collective action demonstrated the power of retail investors and changed how we view and engage in the stock market. A similar theme has been emerging in recent weeks.
Shares of GameStop have surged a whopping 66% on the month, leading the current cycle of highly shorted meme stocks that are surging higher. The company possesses an increasingly bearish sentiment, with 19.6% of the float sold short and a consensus sell rating by analysts. As of April 15, while the short interest declined almost 9% over the previous month, close to 59 million shares were sold short, a hefty amount given the stock's average trading volume of just 5.4 million shares.
AMC Entertainment Holdings Inc.
Shares of AMC, a once leader alongside GME during the meme craze in 2021, have yet to catch a bid and squeeze higher during the current cycle. Instead, shares of the company have fallen over 50% in the year as serial dilution has overwhelmed the price action and fundamentals.
That negative performance is reflected in the sentiment, which is overwhelmingly bearish. Based on five analyst ratings, AMC has a strong sell rating and on-the-rise short interest. As of April 15, the short interest rose 20% over the previous month to 19.3%.
Carvana Co.
Shares of Carvana (NYSE: CVNA), a favorite among meme stock traders, have staged an impressive turnaround on the year thanks to changing fundamentals and a surging stock price helped by the ever-present unusually high short interest.
The stock has rocketed over 120% higher this year. It recently surged to new 52-week highs after reporting revenue and EPS beats for the year's first quarter. Since then, the stock has spent several weeks consolidating near its 52-week high, setting up for a potential squeeze higher. Short interest remains elevated, with 14.15% of the float sold short, a 2% decline over the previous month.
Trump Media & Technology Group Corp.
Given its nature, Trump Media & Technology Group (NASDAQ: DJT) is quickly becoming a prime candidate for a meme stock. The $7.4 billion company, which develops a social media platform known as Truth Social, was founded in 2021 and is based in Florida.
Volatility is no stranger to the stock, which has an extreme post-merger range of a high of $66.22 and a low of $22.84 set in April. However, since making that low, the stock has caught a bid and rebounded sharply, now up almost 60% over the previous month and fresh from breaking out of a consolidation. According to Nasdaq, the short interest is at 5.3 million shares as of April 30, an increase of almost 1 million from the previous settlement date of April 15.
