Traders work as Reddit’s logo is displayed, at the New York Stock Exchange (NYSE) in New York City, U.S., March 21, 2024.
Brendan Mcdermid | Reuters
Reddit shares popped 7% on Tuesday, climbing for a second straight day after retail traders kicked off a buying frenzy of so-called meme stocks.
The stock closed at $62.34, Reddit’s second-highest close since its IPO in March. The rally began Monday when “Roaring Kitty,” aka Keith Gill, the man who inspired meme stock mania in 2021, resurfaced online, sending shares of GameStop and AMC soaring.
Gill shared a picture on X that showed a video gamer sitting forward on a chair. The image is often used by gamers to signal they’re taking the task seriously. As of Tuesday’s close, the post has been viewed more than 25 million times, according to X.
Reddit played a central role in the meme stock boom three years ago, largely due to the forum WallStreetBets, where traders gather to share tips and, in some cases, band together to drive a stock up or down. GameStop mentions ballooned on WallStreetBets on Monday after Gill’s post.
The image and a series of other cryptic posts were enough to lift GameStop and AMC by more than 100% in the past two trading sessions. Other stocks that have been bunched in with the meme group rose, including BlackBerry, Koss and SunPower.
“It looks like retail investors are becoming more bullish again and willing to take on more risk,” Neil Wilson, chief market analyst at Finalto, said in a note. “There is no fundamental reason for the move as such — GME’s last earnings report was abysmal.”
Citizens JMP equity research analyst Andrew Boone told CNBC on Monday that he didn’t see any fundamental reason for Reddit’s rally. Still, he said an increase in user activity would help boost the company’s advertising business.
“At the end of the day, more users means more impressions, which means there are more ads for them to sell,” Boone said.
Reddit, founded 19 years ago, debuted on the New York Stock Exchange on March 21 at $34 a share and ran up as high as $65.11, on March 26. The stock then started selling off, falling as low as $39.17 in April, before getting a boost from Reddit’s better-than-expected earnings report earlier this month.