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How To Beat The S&P 500 This Year? Ask GME Stock Investors

Meme stocks are back in the spotlight, as shares of both GameStop and AMC Entertainment have seen recent rallies. Here's what investors should know.
  • Year to date, GameStop is outperforming the S&P 500.
  • On August 8, trading in GameStop and AMC was briefly halted due to high volatility.
  • All eyes are on GME and AMC short sellers: How can they affect the stocks' prices?
Figure 1: How To Beat The S&P 500 This Year? Ask GME Stock Investors

Figure 1: How To Beat The S&P 500 This Year? Ask GME Stock Investors

(Read more from Wall Street Memes: BBBY Stock: Meme Season Has Begun)

Meme Stocks Are Up in a Down Market

How do you beat the market in 2022? Ask GameStop   (GME) - Get GameStop Corporation Report investors.

Despite high volatility, the meme stock has managed to outperform the SPDR S&P 500 ETF Trust undefined year to date. And AMC Entertainment's  (AMC) - Get AMC Entertainment Holdings Inc. Class A Report stock isn't far behind.

Figure 2: GME, AMC and SPY year-to-date performance.

Figure 2: GME, AMC and SPY year-to-date performance.

During the initial meme frenzy of 2021, GameStop and AMC registered a rare negative beta. That meant they moved in the opposite direction from the broader market.

But since the end of last year, both stocks have performed with a positive beta above 2.5. So when the market has gone up or down, GameStop and AMC shares have moved at least twice as far in the same direction.

However, these are still meme stocks. There are large communities of individual shareholders who monitor the stocks daily and chat about them on Reddit investing forums.

And when there is news concerning either GameStop or AMC, these retail investors can still dictate in which direction shares head, regardless of broader market trends.

This year, GameStop's stock-split proposal and AMC's acquisition of Hycroft Mining  (HYMC) - Get Hycroft Mining Holding Corporation Report shares were two examples of news items that motivated retail investors to send shares higher.

And now, the execution of GameStop's split and the announcement of AMC's special "APE" (AMC preferred equity) dividend have caused shares to rally again.

Meme Stocks Trigger Volatility Halts Again

At the opening of the August 8 trading session, the NYSE briefly halted trading in both AMC and GameStop due to high share-price volatility.

Trading halts are meant to protect investors and level the playing field for those who may not be aware of a certain bullish or bearish event.

Because the halt occurred at the beginning of the trading session, that shows how much retail investors were waiting for the markets to open. AMC initially shot up about 7%, while GameStop ticked 2% higher.

Another meme stock, Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report, was up over 30% during pre-market trading.

How Long Can the Meme Rally Last?

The reaction of short sellers to this latest rally could determine the direction either or both stocks take in the short term.

Short activity could push the stocks lower, or it could trigger a short squeeze, in which retail investors push share prices higher.

At the very latest, we can expect to see some moves in AMC's stock on August 22, when the company's preferred stock is listed on the NYSE.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)