Gaming ETFs Surge on Gamestop Meme Stock Run
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The Gamestop meme stock craze returned Monday, boosting a handful of gaming and retail ETFs, as GME stock more than doubled at one point after comments from a pair popular social media figures.
The rise in GME helped to lift gaming and retail exchange-traded funds by as much as 8% led by the Yield Max Ultra Option Income strategy ETF (ULTY), which has the largest GME stock exposure at 6% of assets. Other ETFs gaining on the GME surge included the Amplify Video Game Tech ETF (GAMR) and the SPDR S&P Retail ETF (XRT), both up 4% Monday morning.
Trading in Gamestop was halted temporarily as the price surged. It jumped 69% to $29.50 in early afternoon trading.
The trading frenzy began before markets opened as “Roaring Kitty,” a key player in 2021’s infamous meme stock short squeeze, returned from a three-year hiatus Sunday, posting an image on X of a gamer intently leaning forward.
A popular and controversial social media figure, Andrew Tate, added to the morning craze by Tweeting the message, “Buy 1,000,000 USD of Gamestop?” to his 9 million followers on X.
Are Meme Stocks Making a Comeback?
The meme stock craze was a unique event in early 2021 that involved a surge in the price of stocks, such as GameStop (GME) and AMC Entertainment (AMC), driven primarily by a large group of individual investors, often communicating and coordinating through online forums like Reddit.
In 2021, hedge funds heavily shorted GME stock, betting its price would decline. However, a surge in retail investor buying caused a "short squeeze." As the price went up, short sellers were forced to buy back shares to cover their positions, further driving the price up in a rapid snowball effect.
AMC stock was also up as much as 33% in morning trading, increasing speculation that the meme stock craze is returning.
There are 43 ETFs that hold AMC stock, but none have heavy exposure, as the ETF with the highest AMC allocation, the Invesco Dynamic Entertainment and Leisure ETF (PEJ) holds a modest position of less than 2% of assets.