Why the 2024 meme stock action is much tamer than 2021 — so far

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Meme stocks survived another volatility-fueled session Tuesday.

Taking a page from the 2021 playbook, GameStop (GME) and AMC Entertainment (AMC) led the charge.

Both meme stalwarts notched gains over 74% Monday and had further doubled their share prices on the open Tuesday — only to sell off most of the day into the close. Nevertheless, after dozens of volatility halts GameStop closed the day up 62% while AMC jumped by 30%.

Amid some gentle coaxing by Keith Gill (aka Roaring Kitty), a slew of names familiar to Reddit (RDDT) boards followed — companies like Koss (KOSS), Tupperware (TUP), Virgin Galactic (SPCE), Hertz (HTZ), and BlackBerry (BB).

But while the explosion in volatility rightfully invites comparisons to the well-known 2021 saga that played out on Reddit and across US stock exchanges, 2024 is already proving to be quite different.

This year, Wall Street is driving the bus.

Vanda Research crunched the numbers and reported in a note to clients that GameStop and AMC have only seen a fraction of the inflows experienced in early 2021. Flows into these names at the peak of the early 2021 frenzy were over four times Monday's volume.

"Do we think more retail traders can jump in on the trend in the coming days? Yes. Do we think this is a repeat of 2021? No, and the chances we reach that stage are low," said Vanda.

Without glancing at a single stock chart, it's easy to point out that 2021 was likely a historical aberration fueled by bored recipients of pandemic stimulus checks.

Wall Street was caught flat-footed. Hedge funds like Melvin Capital were obliterated.

But institutional investors learned from the 2021 episode and are better prepared now, argues Vanda.

"Quant/hedge funds are much better equipped to handle these situations nowadays," Vanda senior vice president Marco Iachini noted. "If anything, we believe the chances that they participate along with retail in the squeeze but also lean against and then exit these trades ahead of retail traders are high."

As of Monday's close, the portion of share turnover in GameStop attributable to retail investors averaged 7% over the prior five days — and that number was only slightly higher for AMC. In 2021, the averages and spikes were materially higher, indicating much greater participation by retail traders.

Data in the options market confirms a similar story.

But the biggest difference this year might just be the lack of one single, coherent narrative like the meme story that captured headlines in 2021.

Only last week, we wrote about the recent resurgence of volatility in meme names. "In a critical break from prior trading epochs, much of the recent meme stock volatility is being fueled by material news and fundamentals, like earnings, as opposed to Reddit posts," we wrote.

Indeed, our (unofficial) Yahoo Finance meme stock heat map reveals impressive returns over the last two days that are mostly green across the board. But aside from GameStop and AMC, these daily returns are decidedly not triple digits as they were three years ago.

In fact, the bigger names on this list — like Coinbase (COIN), Carvana (CVNA), and Palantir (PLTR) — have been making their gains the old-fashioned way: around earnings and bitcoin fundamentals.

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