Will the return of “Big Brother” trigger a comeback of the meme stock frenzy?

On Monday, in the absence of major news,$GameStop (GME.US)$The intraday stock price soared by more than 110%, and intraday trading was suspended for a while. This frenzied scene can't help but relive the intense tug-of-war between investors and shorting institutions against GameStop in the “retail versus short” in 2021.

The catalyst for GameStop's surge this time is that Keith Gill, codenamed “Roaring Kitty,” posted on social media site X, and speculations about its return are raging.

The content of the post shows a man leaning forward and holding something that looks like a game controller. Some traders think this means Gill is starting to act again. Gill's account has been dormant for a long time. In 2021, he called on short-term traders on Reddit to skimp GameStop to fame.

X users were ecstatic about his return. The post had over 9 million hits within a few hours, and some users said GameStop never sold.

Although GameStop's stock price is far from returning to its peak in 2021, the stock has surged more than 70% in a month under the latest wave of retail buying.

GameStop is still facing high bear pressure, doubling from 25 million shares at the end of 2021. Bears are equivalent to 24% of tradable shares, far above average, and this situation is similar to the sharp rise in 2021. At that time, GameStop surged more than 1,600% in January 2021, bringing the meme stock boom into the public eye.

The hedge fund that shorted GameStop was hit hard by short selling from retail investors. Currently, bear pressure remains high, so there is still a possibility that GameStop's stock price will continue to soar.

However, the sharp rise in the market may come to an abrupt end at any time, and GameStop continues to face severe fundamental difficulties. This round of surge is even less catalyzed by fundamentals. The enthusiasm of retail investors is also often difficult to sustain; they can quickly embrace a particular stock, and they may also quickly abandon it.

Since the collapse in 2022, Meme shares and other unprofitable companies have been in a “dormant” state. This is mainly due to the tightening of financial conditions due to the Federal Reserve Powell's interest rate hike cycle. Will the upcoming interest rate cut cycle begin some kind of recovery?

Currently, it seems that Meme stocks are making a comeback. Apart from GameStop, movie theater chains favored by retail investors$AMC Entertainment (AMC.US)$Shares also surged nearly 15% on Monday.

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