Shares of GameStop climbed more than 75% in early trading on Monday, triggering a halt in markets multiple times on account of the volatility. The rally softened over the ensuing hours, but the price remained up 30% into the late morning.
The surge followed the reemergence on Sunday of a Reddit account associated with Keith Gill, the trader known as Roaring Kitty, whose online posts helped send the stock soaring in 2021.
Shares of the movie theater chain AMC, another pandemic-era meme stock, vaulted more than 10% on Monday morning.
Analysts who spoke with ABC News said the price movement resembles the previous frenzy centered on GameStop and AMC, saying it may once again deliver returns for some investors. However, they cautioned, investors face considerable risk if the momentum peters out before they sell their shares.
Here's what to know about the skyrocketing price of GameStop.
Why is the price of GameStop soaring?
The Reddit account associated with Gill posted a screenshot on Sunday of an apparent portfolio holding five million shares in GameStop, purchased for $21.27 each, amounting to a stake valued at about $115 million when pegged to the closing price of GameStop on Friday.
The portfolio also featured 120,000 call options in GameStop at an exercise price of $20 per share.
ABC News has not confirmed the Reddit post was authored by Gill.
In addition to the post on Reddit, an X account associated with Gill posted an image of the reverse card from Uno, a card game, suggesting to some observers that Gill intended to rejuvenate the price of the stock.
In 2021, the price of GameStop climbed nearly 700%, driven in part by traders discussing the company on a Reddit chatroom called Wall Street Bets, most notably Gill. The rally did not coincide with a major strategy shift or executive shakeup for the ailing chain of video game stores.
"People think that guy was right last time and he must be right this time," Michael Pachter, a managing director at the financial research firm Wedbush, told ABC News.
The apparent posts from Gill on Sunday follow a similar flurry of activity last month. On May 12, an X account associated with Gill returned from a nearly 3-year hiatus by posting an image of a man sitting up in his chair. The post set off a 180% spike in the stock price over the ensuing days, before shares plummeted to a level near where they stood before the surge.
Should investors buy GameStop while it's rising?
Analysts said GameStop may continue to rise in the short term but they noted differences in the trade this time around and sounded alarm about the risk of sustaining losses if others unload the stock first.
In 2021, the surge in trading was driven in part by investors' attempt to achieve a short squeeze. Under that scenario, investors drive a sudden spike in the price, forcing a surge of additional share purchases from others who want to cover their previous bet that the price would fall.
Back then, Gill and other investors identified a massive short position in GameStop -- a dynamic that eventually catapulted the stock upward as short sellers aimed to cover their losses.
In this case, however, the short position no longer exists, Pachter said. Meanwhile, he added, the company faces a difficult business environment as it weathers a transition toward downloadable games and away from its specialty of in-store purchases.
The current circ*mstances heighten the level of risk faced by prospective investors, he added.
"A stock is worth what somebody's willing to pay for it," Pachter said. "If you want to buy it at $30 because you think some fool will buy it at $40, that's a Ponzi scheme."
Mark Hackett, chief of investment research at asset management firm Nationwide, echoed concern about the risk involved.
"Even for those who get paid to do this every single day, timing the market is incredibly difficult," Hackett told ABC News. "You have to be right getting in and right getting out."
Still, both analysts said the latest spike in GameStop marks an example of the considerable role everyday investors can play in the price movement of individual stocks.
It is difficult to forecast the near-term outlook for meme stocks like GameStop and AMC, in which stock performance is divorced from a business' financial health, they added.
"This shows the incredible power of the retail investor," Hackett said. "But it's incredibly unpredictable."
