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Why GameStop and Other Meme Stocks Jumped Today

By Howard Smith – Sep 13, 2021 at 4:07PM

Key Points

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A major GameStop shareholder disclosed a big change in ownership last week.

What happened

It's hard to know what drives the moves in so-called meme stocks. But after some actual good news for the business helped shares in AMC Entertainment Holdings today, it may just be the others are moving in sympathy. Several other names, including original meme stock GameStop (GME 3.46%) are moving higher. As of 3:50 p.m. EDT, GameStop, apparel retailer Express (EXPR 0.71%), cannabis company Sundial Growers (SNDL 8.68%), and SmileDirectClub (SDC -6.55%) were moving as follows:

  • GameStop was up 6.5%.
  • Express was up 8.5%.
  • Sundial Growers was up 2.8%.
  • SmileDirectClub was up 16.3%.

So what

Meme stocks sometimes seem to move just on the whims of social media forums. But after AMC got a potential shot in the arm from news in the movie industry today, some of the retail traders following these names may be focusing back on short interest to bet on potential short squeezes. SmileDirectClub has over 32% of its float sold short, as of the end of August, according to data from MarketWatch. 

bar chart with rockets on top indicating stocks rocketing higher.

Image source: Getty Images.

GameStop still has almost 12.5% of its shares shorted, Express has 5.3%, and Sundial Growers has 26%. Many investors that are betting on these names focus on that metric, hoping that the short-sellers are forced to cover, driving shares higher. 

Now what

The most interesting bit of recent news from these names came when GameStop reported its quarterly financial update last week. While sales grew by more than 25% compared to the prior-year quarter, GameStop reported another net loss. And investors didn't respond well when the new CEO didn't take questions on the conference call, which only lasted eight minutes.

Another bit of news from GameStop came out the next day in a Securities and Exchange Commission filing. Investment management firm BlackRock (BLK -1.27%) reported on Sept. 9 that it held 6.6% of GameStop shares. That indicates the company has sold about 50% of its holdings since it last reported its holdings in January.

But the drop in GameStop shares has been recouped with today's move upward. Traders relying on social media may be betting on short squeezes and a retail movement to make money in these names. But serious investors should still focus on business fundamentals. That may be why BlackRock took profits last week.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

GameStop Stock Quote
GameStop
GME
$27.52 (3.46%) $0.92
BlackRock Stock Quote
BlackRock
BLK
$712.98 (-1.27%) $-9.20
Express Stock Quote
Express
EXPR
$1.42 (0.71%) $0.01
Sndl  Stock Quote
Sndl
SNDL
$3.13 (8.68%) $0.25
SmileDirectClub, Inc. Stock Quote
SmileDirectClub, Inc.
SDC
$0.56 (-6.55%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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