Ever since bands of smaller-pocketed and novice investors began driving the stock prices of struggling companies to astonishing heights three years ago, the potential for more flareups has been evident.
Some things are different this time. The most significant change since GameStop’s initial meteoric rise is how the 2021 experience makes this phenomenon feel more familiar. That familiarity, along with some market changes, should help Wall Street better handle the sharp movements, experts say. The 2021 GameStop surge tested the capacity and resilience of securities markets in ways “few could have anticipated,” according to a report by the U.S. Securities and Exchange Commission later that year.
However, some aspects remain unchanged. Chief among them is the inherent risk of losing everything, which accompanies the potential for quick profits in such volatile stocks. Here’s a closer look at what’s happening:
WHAT’S HAPPENING?
GameStop, the pioneer of meme stocks, has experienced a sudden and sharp surge. Its stock jumped 60.1% on Tuesday after a 74% increase the day before. Other meme stocks from the pandemic era are also seeing radical movements. AMC Entertainment, the movie theater operator, leaped 32% on Tuesday.
