May 14, 2024
Meme stock resurgence will 'end in tears,' says portfolio manager
, BNN Bloomberg
Avoid meme stocks with a thousand foot pole: portfolio manager
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One portfolio manager says gains in GameStop Corp. shares have nothing to do with the company's performance, adding that investors should stay away from the renewed enthusiasm in meme stocks.
On Monday, Bloomberg News reported GameStop shares surged following Keith Gill’s return to social media with a post on X. In 2021, Gill spurred interest in meme stocks under the name “Roaring Kitty,” becoming a prominent figure involved in a mass effort by day traders on Reddit to squeeze GameStop short sellers. GameStop shares rose over 75 per cent during late morning trading Tuesday.
“This has nothing to do with the underlying fundamentals of GameStop. We are not overnight buying millions more of games now,” Ryan Lewenza, portfolio manager of Turner Investments at Raymond James, said in an interview with BNN Bloomberg on Tuesday.
He added that the post on X is “purely a picture” that indicates Gill’s interest in what is happening.
— Roaring Kitty (@TheRoaringKitty) May 13, 2024
“And all of a sudden the stocks are starting to rally. People are piling in. But this is going to end just as it ended (before), in tears. Some people are going to scalp some money, but this is going to end in tears,” Lewenza said.
On Monday, shares of AMC Entertainment Holdings Inc. and GameStop rallied more than 70 per cent.
Following Gill’s recent return to social media, the account Roaring Kitty has posted several other times.
As meme stock enthusiasm has returned to the investing landscape, Lewenza said “this is Groundhog Day, we’re right back in this.” He noted that a few years ago, Gill would release videos on his outlook for GameStop and other equities focusing on stocks with high short interest.
Lewenza said he also recommends investors avoid exposure to meme stocks “with a 1,000-foot pole.”
“Now the stock could double from here. When you get these speculative manias where people are piling in on a somewhat thinly traded stock, it can go up more,” he said.
“One day, this is going to gap down. All the people that are… in for a short time, in for a good time not a long time are going to start selling and the stock will come cratering down.”
With files from Bloomberg News.
