AMC, GameStop shares rally - are meme stocks back?

Shares of AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) have surged Monday, with many investors wondering why. As of 10:23 am ET, AMC has jumped 18%, while GameStop has popped by a much more significant 83%.

Some have speculated that Reddit's recent successful IPO ignited the rally, and while that may have helped GameStop shares' recent run, there may be another reason for the strong move in both stocks premarket Monday. On X (formerly Twitter), a tweet from the account @TheRoaringKitty has been suggested as a reason for the rally, especially in GME. 

Keith Gill, aka Roaring Kitty, heavily invested in GameStop (GME) throughout 2020, believing the company was undervalued. He shared his bullish thesis on Reddit's WallStreetBets forum.

During 2020 and 2021, mem stock mania resulted in GME and AMC hitting record highs as retail traders on the WallStreetBets Reddit, inspired by Gill's confidence and fueled by social media, piled into GME en masse, sparking a buying frenzy. 

This squeezed hedge funds, which had heavily shorted the stock, leading to a dramatic rise in GME's price. AMC, another heavily shorted stock, followed a similar trajectory, with its price soaring due to retail investor enthusiasm.

GameStop shares have been rising significantly over the last month, up more than 60%. Now, the return of the TheRoaringKitty account, which tweeted for the first time in almost three years on Sunday evening, has coincided with the rise of both meme stocks once again, resulting in investors wondering whether meme stock mania could be back.