Meme stocks were ripping higher on Monday, led by Bed Bath & Beyond Inc BBBY, which was up another 50% on Monday morning and is now up 111.5% in the last week. Other high-flying meme stocks of 2021 are also on the move on Monday, with GameStop Corp. GME up 12.9% and AMC Entertainment Holdings Inc AMC up 17.7%.
What Happened? Much like the extreme rallies in meme stocks throughout the last year, the surge on Monday morning does not appear to be tied to any news related to the companies. Last week, AMC reported a smaller-than-expected second-quarter loss of $121.6 million and announced a special dividend of preferred stock that will trade under the ticker “APE.”
The new preferred shares are a workaround for AMC to raise additional capital even though it has capped out its authorized common stock share count.
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The AMC dividend announcement may have reignited interest in meme stocks on Reddit’s WallStreetBets subreddit. WallStreetBets mentions of AMC, GameStop and Bed, Bath & Beyond have skyrocketed in recent days.
Cohen Plays: One common thread between GameStop and Bed, Bath & Beyond is Chewy Inc CHWY co-founder Ryan Cohen. Cohen is chairman of the GameStop board of directors, and his RC Ventures has a 10% ownership stake in Bed, Bath & Beyond. Cohen reportedly played a large role in the departure of former Bed, Bath & Beyond CEO Mark Tritton in June. Chewy shares were up 8.6%.
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The meme stock momentum may continue through at least Aug. 15, which is the record date for the AMC special dividend.
Two new meme stocks that have caught the market’s attention in recent weeks were trading well off their highs on Monday. AMTD Digital Inc – ADR ADR HKD was down 20.2% on Monday morning, while its parent company AMTD IDEA Group – ADR AMTD was down 16.1%.
Benzinga’s Take: There’s plenty of money to be made trading these stock manias in the short-term, but it’s extremely dangerous holding stocks of poorly performing companies in the long-term. Even after the recent rallies, AMC, GameStop and Bed, Bath & Beyond’s stock prices are down 19.2%, 27.8% and 58.2%, respectively, since June 1 of last year.