Meme stocks GameStop, AMC, and Bed Bath & Beyond rise again

Battered-down meme stocks are back despite recession fears as retail traders snapped up shares of faltering companies like GameStop, AMC and Bed Bath & Beyond.

The three companies are once again the most buzzed about among the WallStreetBets Reddit crowd, according to Ape Wisdom, which tracks trending stocks on the social media site.

AMC Entertainment, the beleaguered movie theater company, has dropped 10% year to date but popped 54% over the last five days.

Bed Bath & Beyond, the struggling retailer, is down 25% year to date but up 97% over the last five days.

GameStop, the once left-for-dead video game company that set off the meme frenzy last year, is up more than 13% year to date after surging 21% over the last five days.

Fundamentally, nothing has changed to push these companies higher — all three are still expected to lose money this year — and it’s unclear just what sparked interest in the companies again.

It’s a stark change from just a few months ago when major banks including Morgan Stanley and Goldman Sachs issued reports saying the rise of the retail trader was over — in large part because of the Federal Reserve raising interest rates and tightening the market.

In the spring, retail traders were hit hardest by the downturn in stocks, having on average lost all the gains they made when markets were at their apex, according to Morgan Stanley, which looked at retail traders who entered the market for the first time in 2020 and created a basket of their favorite stocks.

While retail traders outperformed the S&P 500 from May 2020 to May 2021, their performance fell off sharply — and flatlined this year through March 2022 even as the S&P 500 made gains during the beginning of the year.

A similar study involving a Goldman Sachs basket of retail stocks showed identical results. The retail stock nearly doubled in value from January 2020 to November 2021 but dropped 32% this year. Likewise, retail traders’ buying power has also faded. In April, day traders bought just $14 billion in stocks — the second slowest buyup in nearly two years.