The astonishing GameStop (NYSE:GME) short squeeze in January 2021 was a watershed moment for meme investing. Although coordinated retail investors have bought into positions in a similar way to meme stocks in the past, 2021 underlined the strength of social media in driving the meme stocks to buy now.
2021 saw GameStop rally 1,800% in a matter of days before dropping back down to earth, while later in the year, AMC Entertainment (NYSE:AMC) grew almost 2,700% as investors turned their attention to the struggling cinema chain.
These rallies were driven by retail investors using social media to coordinate their purchases. Reddit (NYSE:RDDT) groups like r/WallStreetBets significantly grew in popularity, and meme-focused investor influencers like Keith Gill, better known as Roaring Kitty, championed GameStop as a nostalgia-driven option for investors.
Powered by government stimulus packages in the wake of the pandemic, retail investors had the liquidity to create eye-watering rallies for the likes of GME and AMC in 2021, but why is Q3 2024 a good opportunity to start contemplating which meme stocks to buy now?
Keith Gill made his return to social media in recent weeks, posting a series of cryptic memes on X and live-streaming to hundreds of thousands of viewers on YouTube. The return of Roaring Kitty has brought fresh rallies for GameStop and a number of other meme stocks to buy now since his return, so let’s take a look at some of the biggest options in Q3 2024:
Chewy (CHWY)
On the face of it, U.S. pet food retailer Chewy (NYSE:CHWY) doesn’t have the characteristics of other meme stocks to buy. The likes of GameStop and AMC were nostalgia-driven, while other stocks are favored among retail investors for their operational quirks in niche industries. So, what makes Chewy such a strong meme stock option? Roaring Kitty does.
According to a recent regulatory filing, Gill has bought nine million shares in Chewy, representing a value of $245 million.
Crucially, Chewy’s founder, Ryan Cohen, is the CEO of GameStop and has likely played a deciding role in attracting Gill’s investment.
With the backing of Roaring Kitty, Chewy gains one of social media’s most famous influencers. In his typical form, Gill hinted at his interest in Chewy by posting a cartoon image of a dog on his X account on June 27, 2024.
Chewy closed Q2 2024 69.3% up on the beginning of the quarter, and although the stock has struggled to keep up the momentum, we’ve seen with the GameStop short squeeze in 2021 that Keith Gill has a habit of driving exponential growth for struggling stocks.
Reddit (RDDT)
Meme investors have historically bought into stocks they view favorably, and this is likely to drive more interest in the social media platform Reddit, which debuted on the New York Stock Exchange in March 2024.
Known as the platform on which the popular meme investor forum r/WallStreetBets operates, Reddit has long been the leading choice for retail investors to keep their ears to the ground and identify fresh market opportunities.
With more than 16 million members, Reddit’s WallStreetBets group is a leading hub for meme investor activity, and this could help RDDT stay close to meme stock outperformance in Q3 2024.
The stock’s fundamentals can also help drive investor activity. RDDT rallied more than 25% between its market debut and the end of Q2 2024, and with a 37% increase to 82.7 million in user traffic and a revenue increase of 48% to $243 million reported in its Q1 earnings, there will be plenty of optimism for further outperformance in Q3 2024.
Reddit’s stock price received a recent boost following the announcement of a deal with ChatGPT owner OpenAI, which will see the generative AI model gain access to Reddit content, with the social network also gaining new AI features in the future.
GameStop (GME)
No list of high-potential meme stocks would be complete without GameStop. Although Roaring Kitty has bought heavily into Chewy, the potential for GameStop to embark on exponential price rallies can’t be ignored.
Between January 1, 2020, and the end of Q2 2024, GameStop’s price on Wall Street has grown 1,579.59%, and recent rallies show that meme investors aren’t willing to forget about the world’s most famous meme stock.
With the expectation of U.S. Federal Reserve rate cuts on the horizon, we’re likely to see a rise in investor liquidity that could see higher volumes of interest flow back into popular meme stocks like GameStop.
The stock also has a figure beside Keith Gill that’s helped to provide a boost to its value in recent weeks: CEO Ryan Cohen.
Cohen’s outspoken support for U.S. Presidential Election candidate Donald Trump resonated with supporters enough to see GameStop’s stock climb 11% as a result. In a sentiment-driven market, it’s these big personalities that can have a profound effect on the behavior of meme investors.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.