Reddit’s shares near record high following two-day meme stock rally

Reddit shares surged on Tuesday, extending gains for a second consecutive day as retail traders initiated a buying frenzy of meme stocks. The stock closed at $62.34, marking Reddit’s second-highest closing price since its IPO in March. The rally began on Monday when Keith Gill, also known as “Roaring Kitty,” resurfaced online, sparking a surge in shares of GameStop and AMC.

Gill shared a cryptic image on X, depicting a video gamer in a serious posture, which garnered over 25 million views. This post, along with other mysterious messages, lifted GameStop and AMC by over 100% in just two trading sessions. Other meme stocks such as BlackBerry, Koss, and SunPower also saw significant gains during this period.

The surge in Reddit’s stock price has caught the attention of market analysts, with Neil Wilson noting that there is no fundamental reason for the move, especially considering Reddit’s recent poor earnings report. Similarly, Andrew Boone from Citizens JMP equity research sees no fundamental reason for Reddit’s rally but believes that increased user activity could bolster the company’s advertising business.

Reddit, founded 19 years ago, went public on the NYSE in March, initially trading at $34 a share before reaching a high of $65.11. The stock experienced a decline in April, dropping to $39.17, before rebounding in May following a better-than-expected earnings report. The recent surge in Reddit’s stock price highlights the renewed bullish sentiment among retail investors, who appear more willing to take on risk in the current market environment.

Overall, the resurgence of meme stocks fueled by online forums like WallStreetBets showcases the power of social media in influencing stock prices and investor sentiment. While the underlying fundamentals of these companies may not justify the recent price movements, retail traders continue to drive volatility in the market through coordinated buying and selling activities. As the meme stock craze persists, investors should exercise caution and conduct thorough research before making investment decisions.

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