Retail Buys $5B In a Week As Meme Stocks Soar

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As meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc. have soared in recent weeks, retail investors are flooding the market with cash.

Individuals bought $5 billion worth of stocks and ETFs last week, about 50% above average, according to a new Reuters report.

Meme stocks have been a major target, with retail investors buying $48.1 million of AMC shares on Monday alone, according to Bloomberg. GameStop also saw inflows in the millions.

Heavy activity in call options on GameStop and AMC shows just how bullish retail is. AMC call options (bets the price will rise) outnumber put options (bets it will fall) by nearly 2:1, the highest since May 2021.

Behind this torrent of cash are strong household finances. The personal savings rate is 6.3%, on the high side compared to recent decades. Household net worth sits at an all-time high of $142 trillion.

Investors also have fewer viable options besides stocks. Rates on bonds are below inflation, which means guaranteed losses.

Strong retail interest in meme stocks plus flush balance sheets should caution short sellers away from these volatile stocks.

But like moths to the flame, short sellers continue to pile on bets against GameStop and AMC. Both have about 20% of their shares sold short.

Perhaps they’ll have to get burned for billions again before they learn their lesson.

More on markets:

NYSE Investigating Citadel Trades

FBI Raids Short Sellers

Mass Firings at Citadel Right Before Federal Probe

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Photo: “Retail GameStop” by ccPixs.com is licensed under CC BY 2.0

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