Roaring Kitty's Surprise Return: Can 2021's Meme Stock Frenzy Make a Comeback?

The account’s post on X showed a man leaning forward with what looked like a gaming controller, which some traders interpreted to mean that Gill is coming back into action. Gill, whose account has long been dormant, shot to fame in 2021 by rallying day traders on Reddit in an effort to squeeze GameStop short sellers, GameStop soared more than 1,000% in a few days.

Most of the moves pared back sharply as the session moved into the afternoon, tamping down speculation about the start of another meme mania. GameStop’s stock surge still has a long way to go to match the meme stock frenzy of 2021. Here’s a closer look at some financial metrics that explain why:

Source: Barchart

Options volumes have picked up in the past few weeks, but they’re nothing like the levels seen in 2021. About 700,000 contracts changed hands on Monday - more than four time the average over the past month, according to Barchart. Calls led as large numbers of $30 and $34 contracts moved.

However, during peak meme mania in 2021, millions of contracts traded in a single session. The most active day that year - Jan. 22 - saw 2.2 million contracts change hands.

A driver of 2021’s frenzy was that most retail traders didn’t already own GameStop, let alone at higher prices. In January of 2021, GameStop was consistently the most bought stock across trading platforms that cater to individual investors with buy orders vastly outpacing those to sell.

However, that wasn’t the case on Monday. While GameStop was the most traded stock on Fidelity’s platform, orders to sell shares nearly equal to buys. This indicates that the retail traders was selling to each other rather than being the sole driver of the stock gains. Even with the pop, GameStop is far from an intraday peak. The stock would need to more than quadruple from Monday’s close to reach that peak.

When Roaring Kitty and now GameStop Chief Executive Ryan Cohen kickstarted the meme craze, interest rates were near historic lows. While three years ago, the Fed began lifting rates in March 2022 at the fastest pace in a generation to cool inflation. Now, the stock market and the economy are in a different place, and retail traders have seen a reversal of fortunes as high borrowing costs diminish their holdings in risky assets.

Source: Bloomberg, Barchart, Yahoo Finance