NEW YORK (AP) — Meme stocks are shaking Wall Street once again Monday. And, as is so usually the case, it all started online.
A post on Reddit late Sunday indicated that Keith Gill, a central character in the original 2021 meme stock crack, had built a sizeable stake in GameStop. Shares of GameStop closed up 21% to $28 after jumping above $40 right after the opening of trading. AMC Entertainment, another popular meme stocks, rose 11.1%.
If it all sounds familiar, it should. It was just three weeks ago that GameStop shares were soaring on excitement about a post on social media by another account tied to Gill. At that time, a Twitter account associated with him made its first posting since June 2021, though the gains fizzled relatively quickly.
Ever since bands of smaller-pocketed and novice investors began taking stock prices of downtrodden companies to breathtaking heights three years ago, the potential for more flareups has been obvious.
This time, Wall Street is better prepared to more easily digest the sharp movements, experts say. But some things remain firmly the same. Chief among them is the risk associated with such volatile stocks, where prices can soar — and crater — quickly. Here’s a look at what’s going on:
Gill has become a hero online, known for continually professing how much he liked GameStop's stock as it charged to heights in 2021 that professional investors saw as irrational. He even said it in testimony before Congress when it was looking into the meme-stock craze.
Late Sunday, an account on Reddit with the handle Deep F- - - - - - Value shared a screenshot showing an account holding 5 million shares of GameStop stock, plus options to buy more. The total holdings were worth $181.4 million, as of Friday's close, and the screenshot looked just like ones that the account had shared during the supernova run for GameStop in early 2021.
It was the first post for the Reddit account since April 2021, when it had posted what it called a “final update” on its "YOLO", or you-only-live-once, investment in GameStop. Euphoria erupted quickly, with users on Reddit exclaiming “I'M HERE FOR HISTORY!” and “If he's still in, I'm still in.”
When the stock market opened for trading on Monday, GameStop immediately soared.
Financial analysts and professional investors who care mostly about numbers like profits, cash flow and interest rates would say no. GameStop’s financial prospects did not change over the weekend, before the dizzying swings in its stock price.
Conventional wisdom says a stock should eventually settle at a price that reflects how much cash the company is generating, where interest rates are heading and other factors. But in the short term, what sets a stock’s price is how much investors are willing to pay for it. And, on Monday at least, people are willing to pay much higher prices for shares of GameStop.
This is the new age of investing, one where anyone can buy a stock with zero commissions simply by tapping a few times on a phone. It's the culmination of years of innovation. At each step of the way, consumer advocates hailed the broadening playing field, which allowed more people to invest in stocks and build wealth. But they also warned that easy access could encourage people to trade too quickly or too rashly.
Meme-stock companies have more shares trading in the market than they did in 2021, which could lessen the chances of what's called a “short squeeze,” according to Nick Battista, director of market intelligence at tastylive, a streaming network geared toward options traders.
A short squeeze is a relatively rare event that can yield eye-popping profits for people riding the wave. When investors bet a stock's price will go down in the future, they “short” it by borrowing shares and selling them. Later, if the price does indeed fall, the short sellers can buy the stock, return the borrowed shares and pocket the difference.
But when a highly shorted stock rises in price quickly, short sellers sometimes scramble to get out of their trades. They can do that only by buying shares of the stock, which can set off a self-feeding cycle that makes the price shoot even higher.
Such a short squeeze likely contributed to GameStop's thrilling ascent in 2021, but the SEC"s staff said it was a small fraction of the overall purchases and that GameStop's stock stayed high even after short sellers had gotten out of their trades.
GameStop in March had roughly 305.9 million shares of its stock trading in the market, more than four times the number of shares it had in March 2021. Such growth “greatly increases the amount of activity needed to squeeze higher" for GameStop and other meme stocks, Battista said. “Can they move higher? Sure, but it’s going to be a tougher task this time around.”
It's important to know the momentum can shift just as suddenly the other way. It took just four weeks in 2021 for GameStop's stock to go from less than $5 to more than $120. But it has yet to touch that price again. Even after its big jump in recent days, GameStop shares can still be bought for less than $30.
After briefly reaching $390 during the summer of 2021, AMC's stock is now at roughly $5.
FILE - A GameStop store in New York is shown on Jan. 28, 2021. What’s going on with GameStop’s stock doesn’t make sense to a lot of people. The struggling video game retailer’s stock has been making stupefying moves this month, wild enough to raise concerns from Wall Street to the White House. (AP Photo/John Minchillo, File)
FILE - An AMC movie cinema is shown before opening Friday, Jan. 29, 2021, in Garland, Texas. (AP Photo/LM Otero, File)
BAKU, Azerbaijan (AP) — With time running down, negotiators at the United Nations annual climate talks on Wednesday remained mired in the maze of a trillion-dollar money problem, turning to host Azerbaijan to lead the way to daylight with a promised map to be released in the dark of night.
Vulnerable nations are seeking $1.3 trillion to deal with damage from climate change and to adapt to that change, including building out their own clean-energy systems. Experts agree that at least $1 trillion is called for, but both figures are far more than the developed world has so far offered.
Negotiators are fighting over three big parts of the issue: How big the numbers are, how much is grants or loans, and who contributes.
After 10 days of talks, the host presidency of the talks, called COP29, promised a draft proposal around midnight local time, which they acknowledged will be far from final and have many decisions still to be made. But it's something, a clear step forward, said lead negotiator Yelchin Rafiyev.
German special climate envoy Jennifer Morgan late Wednesday afternoon put the onus on the COP29 presidency.
“Much is really now in the presidency’s hands and the options that they will put in front of us, the text that will come out,” Morgan said. “I think the options can help shift us into the fast lane towards a green and prosperous future or mire us in a fight about lowest common denominators.”
And the key to a solution is one word, Morgan said: Trust.
“The most critical currency right now is trust — trust in the presidency and and trust between and amongst parties,” Morgan said. “And what this effectively means is a lot of shuttle diplomacy, numerous huddles between negotiating groups.”
At a session where ministers relayed their progress Wednesday, Australia’s climate minister Chris Bowen — one of the ministers leading talks on the money goal — said that he's heard different proposals on how much cash should be in the pot. As well as the $1.3 trillion proposed by developing countries, nations proposed figures of $900 billion, $600 billion and $440 billion, he said.
Diego Pacheco Balanza, the chair of the Like-Minded Developing Countries negotiating bloc, said the group was also hearing a figure of $200 billion in negotiating corridors. That's not enough, he said. “Developed countries whose legal obligations it is to provide finance continue to shift their responsibility to developing countries,” Pacheco Balanza said.
When asked for his response to the $200 billion suggestion, Adonia Ayebare, chair of the G77 plus China negotiating group asked, “Is it a joke?” Speaking to a room of reporters, he added that negotiations need a headline figure of $1.3 trillion. “I used to be a member of the press, I know the headline is important,” he said.
But European climate envoy Wopke Hoekstra said "it is important to determine the elements first, so that you can have an informed conversation about what an ambitious and also realistic number could be.”
Elsewhere, there appeared to be some positivity on working through other issues at the talks.
South Africa's climate minister Dion George — one of two ministers leading talks on how to cut planet-warming fossil fuels — said that “all parties confirmed their commitment to delivering on the Dubai consensus reached last year” when countries pledged to transition away from fossil fuels.
Morgan said 150 nations are working “to come overcome the vocal but isolated minority trying to block progress on” reducing heat-trapping emissions and weaning the world from fossil fuels.
And New Zealand's climate minister Simon Watts was also “very encouraged” by movement on so-called Article 6, a proposal to slash emissions through, among other things, a system of carbon credits that allow nations to pollute if they offset emissions elsewhere.
But a lot was still left to work out.
Alden Meyer of the European think tank E3G summed up the state of negotiations on Wednesday by saying the word of the day at the talks is “circle… as in going around in circles."
Juan Pablo Hoffmaister of the Environmental Defense Fund said “the frustration is palpable” as time starts to run out.
Hoffmaister, who’s a former negotiator for developing countries, said that while potential climate finance goals are finally out, it’s still unclear how they will be delivered — loans, grants or other means. “We need to fix this over the next 72 hours,” he said.
Italy’s special envoy for climate change, Francesco Corvaro, said negotiations feel like they are moving in the right direction, but that it’s likely going to take extra time to reach a deal. “We can’t fail,” he said. But he stressed that Europe doesn’t have the capacity to cover the cost of climate finance alone.
Ali Mohamed, chair of the African Group of Negotiators said he hopes “that our partners will come forward with a justifiable number that will meet the needs and the the scale of the growing problems of climate change.”
Mohamed said there is a clear obligation for developed countries to support poorer countries but “up to now, we don’t seem to have a figure,” he said expressing frustration at the slow progress.
Rizwana Hasan, adviser to the Bangladesh government on environment and climate change, also slammed developed countries in a press conference, saying “the global north and the major emitting countries still lack the feeling of urgency and true commitment” on curbing climate change.
But, she said, there is reason to keep trust in process. “You can’t give up hope," she said. "Giving up hope makes no sense.”
Meanwhile, half the world away in Rio, Brazil, where the Group of 20 summit wrapped up on Tuesday, the United Nations Secretary-General Antonio Guterres told the group of the world’s largest economies that “the success of COP29 is largely in your hands.”
“That goal, the financial goal, in its different layers, must meet the needs of developing countries, beginning with a significant increase in concessional public funds,” he said.
And the president of Brazil, Luiz Inácio Lula da Silva, said developed nations should consider moving their 2050 emission goals forward to 2040 or 2045.
“The G20 is responsible for 80% of greenhouse effect emissions,” he said. “Even if we are not walking the same speed, we can all take one more step.”
The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.
Wopke Hoekstra, EU climate commissioner speaks during a news conference at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Rafiq Maqbool)
Ukraine Environment Minister Svitlana Grynchuk speaks during a plenary session at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Sergei Grits)
Palestinian Chairperson of Environment Nisreen Tamimi leaves after speaking during a plenary session at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Sergei Grits)
Yalchin Rafiyev, Azerbaijan's COP29 lead negotiator, attends a session at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Rafiq Maqbool)
Activists demonstrate for climate finance at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Rafiq Maqbool)
Attendees listen during a session on urbanization at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Rafiq Maqbool)
Activist Erica Njuguna speaks during a demonstration on climate finance at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Peter Dejong)
Activists participate in a demonstration for climate finance at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Peter Dejong)
Activists participate in a demonstration for climate finance at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Peter Dejong)
Activist Erica Njuguna leads a demonstration with signs reading "Global South: stand up for public finance" at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Peter Dejong)
Activists participate in a demonstration for climate finance at the COP29 U.N. Climate Summit, Wednesday, Nov. 20, 2024, in Baku, Azerbaijan. (AP Photo/Peter Dejong)
