Meme Stocks Surge as Retail Investors Flock Back
Meme stocks, which captured the market's attention last year, are making a comeback as retail investors flock back to them.
On Tuesday, shares of GameStop (GME), AMC Entertainment (AMC), and Bed Bath & Beyond (BBBY) all saw significant gains. GME surged over 12%, AMC climbed over 9%, and BBBY jumped over 14%.
The rally in meme stocks is being attributed to a number of factors, including strong retail investor interest, a short squeeze, and the upcoming expiration of monthly options contracts.
Retail investors have been enthusiastic buyers of meme stocks since the beginning of the year. They have been attracted to these stocks due to their low prices, high volatility, and potential for big gains.
A short squeeze is occurring when a large number of short sellers are forced to buy back their shares, which can drive up the stock price. This is happening in meme stocks as retail investors continue to buy and hold their shares.
The expiration of monthly options contracts is also putting upward pressure on meme stocks. If the price of a stock rises above the strike price of an option contract, the option holder can exercise the contract and buy the stock at that price. This can lead to a surge in buying, which can further drive up the stock price.
It is unclear whether the rally in meme stocks will continue. However, retail investors are likely to continue to be a major force in these stocks, which could lead to further volatility.
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