After a significant pullback late last week, meme stocks, particularly GameStop Corp. (NYSE:GME) and AMC Entertainment Holdings, Inc. (NYSE:AMC), resumed their rally on Monday. Amid this development, financier and former White House Communication Director Anthony Scaramucci shared his thoughts about the surge.
What Happened: In a post on X, formerly Twitter, Scaramucci cautioned his followers about the meme stock mania. "A lot of these stocks are not valued properly in the marketplace," he said. "It's sort of the French Revolution of finance, where bee swarms of people are attacking the large asset managers and they are pushing these stocks to stratospheric heights," he said.
And this is crushing some of the hedge fund managers, he added.
"So if you are a proletariat like me, you sort of like the revolutionary spirit of all this," Scaramucci said. "But as an investor, as a sober, rational investor, you got to be super careful."
Scaramucci, a crypto bull, mentioned he has been avoiding meme stocks and recommended others do the same. He predicted a "volatile, rocky ride ahead."
$GME & $AMC – "The French Revolution of Finance" @Scaramucci gives his opinion on the return of 'meme stock mania' last week pic.twitter.com/zjBJuLHOGN
— The Rest Is Politics US (@RestPoliticsUS) May 20, 2024
Why It's Important: Many high-profile investors have warned about the dangers of participating in the meme stock rally, noting that even during the initial run in early 2021, many investors incurred significant losses.
This time, institutional investors and hedge funds are better prepared to handle the effects of the meme rally, according to Vanda Research. The data analytics firm also noted that retail participation in this new meme rally is much lower than during the 2021 mania.
GameStop took advantage of last week's sharp climb in its stock and filed a statement for multiple offerings, including 45 million shares of common stock.
On Monday, after spending much of the session below the unchanged line, GameStop and AMC surged in the final hour to close notably higher. GameStop gained 4.19% to $23.14, and AMC rose 9.77% to $4.83, according to Benzinga Pro data. Since last Monday, when the meme rally 2.0 began, these stocks are up 32.53% and 66%, respectively.
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