AMC, Bed Bath & Beyond, GameStop spike as meme stock mania returns
Yahoo Finance Live anchors discuss how meme stocks are trading.
Video Transcript
BRIAN SOZZI: Here are three things you need to know right now. Meme madness is back on Wall Street. Shares of AMC, Bed Bath & Beyond, and GameStop are catching more attention this morning after big spikes yesterday. These meme tickers were among Fidelity's most actively traded stocks yesterday. And guys, some interesting action.
I'm having deja vu back to early 2021, whether these folks-- whether the meme stock crowd is just hunkered down in their homes, enjoying the air conditioning in this hot weather and trading stocks or trying to figure out ways to beat inflation via stock trading unclear. But again, these stocks are in focus. We should note Bed Bath & Beyond was-- caught a pretty vicious downgrade to underperform over at Baird this morning, calling the move frenzied. But still, all these names in focus, and you can see some of those most active names on our screen right now.
BRAD SMITH: Yeah, it begs the question of, will the run kind of start to fizzle out? We've already seen that in one name, particularly, that had kind of kicked off this fanfare, if you will, around AMTD, particularly. That's been starting to pull back a little here. But then you look at some of the most recent meme stock names, some of the same ones that we've seen back in 2021, AMC, GME as well.
GME, GameStop, was up 20% Monday. AMC was up 8% Monday. Earlier in the day, it looked like they had about 2 and 1/2% in gains premarket. But look at this now. We're seeing a move lower by about 2 and 1/2%, 2.6% premarket.
And look out for where there is short interest in some of these names too. Bed Bath & Beyond, that was a significant short interest name, had about 40% of its floated shares in short interest positions. And so that's something that the meme stock, or at least the retail-- the Reddit retail investor, if you will, typically looks for in some of the targets.
JULIE HYMAN: Yeah, and try to actually force a short squeeze in some of these, meaning that the move upward can be exacerbated because people are forced to or choose to cover their shorts. It hasn't just been price action that's ticked up. It has been-- and we were hinting at that by showing the Fidelity screen of most actively traded stocks.
If you look at the trading volume over the past couple of days, we've seen some pretty incredible spikes in these names. AMC trading-- 132.8 million shares trading hands yesterday. If you look at the three-month average, it's about 45. Bed Bath & Beyond, big jump, huge jump there as well, even larger relative to the three-month average. GameStop not quite as active, but still seeing that activity.
And again, we don't know what sort of the catalyst was for this. But I think what that Baird note illustrates is this still persistent view-- that I don't think is necessarily the incorrect one-- that you have a divorce from fundamentals when you have this level of trading activity. Not that these stocks are not necessarily worth buying. I'm not going to opine on that. But that the level, the magnitude of both the volume and price move sometimes gets divorced from the actual story of these companies. And it's people sort of talking them up on various-- on various boards,
BRIAN SOZZI: Yeah, we've seen Reddit chatter definitely pick up. But I got to give Baird analyst Justin Kleber, he's the one that delivering-- that is delivering that Bed Bath downgrade this morning, at least this is a Wall Street analyst paying attention to the retail community because a lot of the Street completely ignored this move, I would argue, when the meme stock trading popped in early '21.
But to your point, Julie, fundamentals are still awful. And Bed Bath & Beyond needs to raise cash, and they need it very soon. GameStop under severe pressure, not a good second quarter. If anything positive, it came out of AMC. CEO Adam Aron, chief ape, came on our show yesterday saying he's looking to reduce debt significantly, also striking, I would say, an upbeat tone on the box office. At least that move I could somewhat justify.
BRAD SMITH: And so with that move-- and you know, I believe we have a clip of him as well and what he said yesterday on the show. But what he did point out was the change for some of the fundamentals. If we're going to talk about fundamentals, we have to think about where they're engaging with customers differently. For Bed Bath & Beyond, I mean, that has been dismal, and we've well chronicled that.
But then, additionally, on the AMC side, where from Adam Aron's perspective it's all about bringing back so many of those customers into those theater experiences while at the same time not sacrificing a margin because-- from what I had asked him yesterday during that conversation, it really does come down to how you operate that theater experience and does it go more digital, is it more seamless to the point where, in my experience, I only had to talk to one employee on the way in.
That's significant as well as the fact that they want to drum up the investments in that popcorn experience as well as some of the other capital expenditures that they may look to make in the future. I think that's a larger question, where might they put some of that money to work?
BRIAN SOZZI: And that one employee you talked to is probably making 30% more.
BRAD SMITH: Exactly.
BRIAN SOZZI: Aron also told that. I thought that was very interesting.
BRAD SMITH: Exactly.
JULIE HYMAN: It was interesting. But again, whether all that stuff is going on or not--
BRAD SMITH: Right.
JULIE HYMAN: --is the stock worth around 25, which-- where it's trading now? Was it worth 60 when it was trading at the peak of $60? And then you mentioned the sort of newer school--
BRAD SMITH: Sure.
JULIE HYMAN: --or new entrants into the meme stock universe, if you will. And those are new entrants to the market, some of these Chinese IPOs that are also Hong Kong listed or Hong Kong based, talking about the AMTDs and MEGLs of the world, Magic Empire.
BRAD SMITH: Oh, yeah. What a name.
JULIE HYMAN: I mean, the stock is down now, but these things have been flying in recent days, and people don't even know anything about them.
BRAD SMITH: No.
BRIAN SOZZI: This could be short-lived. I'll just quickly add here when we saw that meme stock, when all this erupted in early 2021, there were stimulus checks in play here. Consumers had a lot more savings to put to work in the markets.
It's a different environment. We've seen the savings rate come down significantly as consumers are battling inflation. So they might have less money to put in the market, so this move, this action, could only last for a few days, potentially.
