Meme stocks have once again surged, making fans happy and dismayed, while also showing Wall Street that retail investors driving a crazy rebound in stocks such as GME.US (GME.US) in 2021 are still strong.

After American retail “leading brother” Keith Gill returned to social media platform X after a lapse of three years, Game Station once again became the focus. The company's share price has surged 340% in the past 10 trading days. Keith Gill promoted “retail vs. Wall Street” in 2021 and hyped up the stock price of game stations.

The stock prices of companies such as the cinema chain AMC Cinemas (AMC.US), headphone manufacturer KOSS.US (KOSS.US), and food storage container company Tupperware (TUP.US) have also soared. Like Game Station, the shares of these companies have all been severely shorted, and their fundamentals have declined over the past few years.

Jay Woods, chief global strategist at Freedom Capital Markets, said: “As a trader, it's hard not to use the word 'crazy.'” “When this first happened, it was more like a sport, but now it looks like a fervor, and people are saying, 'This is an opportunity, ''Let's see if we can make money from it.'”

The following chart shows some of the factors driving the meme stock frenzy:

Meme shares that have been seriously shorted have soared in the past 10 trading days

Although GameStop and other Meme stocks have recently seen amazing gains, there is still a long way to go to catch up with 2021's gains. Back then, GameStop's stock price soared 1,700%, AMC's stock price soared 2850%, and Blackberry's stock listed in the US rose nearly 280%.

Is the recent surge in GameStation just the beginning?

Many Meme stocks have been targeted by bears. Since this year, Game Station's short positions have been rising steadily until it reached a 20-month high of 25% in mid-April, and the company's stock price did not begin to rebound a few weeks later.

According to exchange data, this is far below the peak level of short positions in October 2020, when about 107% of GameStop's freely tradable shares were sold short.

GameStop short positions reached a 20-month high in mid-April

The rebound in meme stocks dealt a heavy blow to the bears. According to ORTEX estimates, the book losses of Game Station bears alone have reached 1.28 billion US dollars so far this year.

Peter Hillerberg, co-founder of ORTEX Technologies, said that despite this, there is little indication that a vacuum is taking place. When rising stock prices force bearish investors to close their positions and buy back stocks, there will be a shortfall.

Hillerberg said, “It's probably too early to call it empty.”

Bears have been hit hard

Options trading has surged along with the recent sharp rise in share prices, with most trading focused on call options, which profit when the share price rises.

GameStop options trading volume reached 818,843 contracts on Tuesday, the highest level since March 2021. According to Trade Alert data, AMC changed hands with 1.9 million contracts, the most in about nine months.

Trading data shows that retail activity has rebounded sharply in the past month, but “there is still a big gap compared to the peak of meme frenzy,” Marco Iachini, senior vice president of Vanda Research, said in a report.

“We believe retail investors played an important role in driving GameStop, AMC, and other MeMe stocks higher on Monday, and this has been the case so far on Tuesday.”

GameStop options trading volume has soared

Is this time different?

On Wednesday, a new wave of fervor drove popular Meme stocks such as GameStation and AMC higher for the third consecutive trading day.

GameStop soared 31% before the market, and AMC rose 34%. Both stocks are well below their all-time highs and are expected to record their biggest monthly gains since the first half of 2021.

Ben Laidler, a global market strategist at eToro, said that the conditions that drove Meme stocks to soar in 2021 no longer exist, so this rebound won't last that long.

“This time was different,” he said. “The pandemic lockdown is over. Most of consumers' excess savings have been spent. The short positions on these stocks are not small, but they are much smaller than in 2021. Interest rates are much higher.”

Giacomo Pierantoni, head of data at Vanda Research, said that AMC and GameStop ranked among the top ten securities purchased by retail investors on Tuesday, with daily capital inflows of 51 million US dollars and 16 million US dollars, respectively.

He said the pessimistic news of the US Consumer Price Index (CPI) on Wednesday may prompt investors to withdraw from high-risk bets such as Meme shares.

“Overall, whether this wave of gains can continue will depend on today's CPI data,” Pierantoni said. He added that if inflation data triggers risk aversion, “retail investors will be scared away and encouraged to buy traditional products again,” and if inflation data weakens, “it may drive another wave of gains.”