🔥 Gamestop Rips 110%, as Meme Stocks Make a Return

Good Morning Kings & Queens! “Change is the law of life. And those who look only to the past or the present are certain to miss the future."

— John F. Kennedy

MARKET UPDATE

Shares of biopharmaceutical company Moderna (MRNA) rallied over 7% on Monday off the back of Novavax’s $6 billion Sanofi deal.

TODAY’S BIG HEADLINES

• Gamestop is Back, Ripping 110% in a Day

• Amazon-Backed Self-Driving Company Under Investigation

• Squarespace Pops 13% on Going Private

• Investors Are Bidding Up UK Stock Prices

MEME STOCKS & CRYPTOS

Gamestop is Back, Ripping 110% in a Day🔥

Déjà Vu or Deja Whoa?: On a manic Monday morning, shares of the infamous Gamestop (GME), the meme stock monarch, catapulted higher by a drool-worthy 110% after the puppeteer of its previous rally, “Roaring Kitty“ resurfaced. The share price skyrocketed with such volatility, that trading had to be paused multiple times. It’s like a rollercoaster ride that’s so wild, the safety bar keeps popping open!

The Kitty Pounces Again: The trader Roaring Kitty, made his grand return with his first post on X or Reddit since 2021, featuring an image of a gamer sitting in his chair, leaning forward as if he’s about to take on the final boss. The post garnered 12 million views within a 14-hour period, proving that his return was more viral than a cat playing the piano.

Contagion or Coincidence?: As you’d expect, the tremors were not confined to just one stock. Shares of cinema chain AMC (AMC) rallying over 12%, Nokia (NOK) surged over 2% and Blackberry (BB) rallied over 6%, and of course, the platform enabling this to begin with, Robinhood’s (HOOD) also rallied over 6%, a textbook example of the domino effect. Given the recent skyrocketing of memecoins such as “Dogwifhat” and “pepe”, it’s not a stretch to think we could be in for a rerun of the 2021 saga. It’s like a sequel nobody asked for, but everyone’s secretly excited about.

Black from the Past: Roaring Kitty’s alter ego on Reddit is “DeepF------Value”, who rallied an army of day traders who would cause significant “short squeezes” in positions using call options contracts, forcing funds to cover their short positions and drove the share price higher, like a financial David vs Goliath story. This led to the downfall of several hedge funds which were shorting a plethora of these stocks, including Gamestop and AMC. The main target of these traders was Melvin Capital, who had been heavily shorting GameStop. This blitzkrieg led to almost $3 billion in losses needing to be covered by Citadel, and the share price of Gamestop going from $3 per share to $120 split-adjusted.

ARTIFICIAL INTELLIGENCE

Amazon-Backed Self-Driving Company Under Investigation🕵️‍♂️

Boeing’s Bloopers: Amazon-backed self-driving startup Zoox has been making headlines for all the wrong reasons this week, after it was announced that the company is now under investigation by the National Highway Traffic Safety Administration (NHTSA) after two of its vehicles braked suddenly and were rear-ended by motorcyclists, like a scene straight out of Blade Runner.

Autonomous Disaster or Robot Rebellion?: The national traffic agency confirmed that both incidents occurred during daylight hours, with both vehicles operating in fully autonomous mode at the time of the incidents. Given that these vehicles have neither a steering wheel nor pedals, it’s like it drove itself into trouble. The investigation will focus specifically on the autonomous driving system used by the vehicles, with particular interest in how the software behaves in crosswalks around pedestrians and other vulnerable road users.

The Amazon Chronicle: Ecommerce titan Amazon acquired Zoox back in 2020 for an estimated $1 billion. Since then, analysts have been eagerly awaiting the company to start using the autonomous Zoox vehicles to complete Amazon deliveries, at least in some form of a pilot launch in one area to begin with. Unfortunately, this isn’t the first time the company has been investigated by the NHTSA, with the agency launching a probe into the company back in 2022, investigating whether or not the company’s vehicles met federal safety standards for motor vehicles. It’s like a recurring nightmare for the company, only this time, there’s no alarm clock to wake them up.

MERGERS & ACQUISITIONS

Squarespace Pops 13% on Going Private🔒

Lights, Camera, Transaction!: Squarespace (SQSP), the website design platform, is playing hide and seek with the stock market. After a peek-a-boo session with its share price, which rose 13% on a fine Monday morning, it’s now planning to retreat into the cozy arms of private equity firm Permira in a whopping $6.9 billion all-cash deal. The company claims this hideout will give them the flexibility and resources to invest in enabling entrepreneurs to build better online brands and more easily transact with their customers.

The Nitty-Gritty: Shareholders are set to receive $44 per share, a bit more than the current trading price, thanks to yesterday’s rally. But here’s the twist in the tale: two years ago, when Squarespace went public, the valuation was equivalent to $50 per share. So, the deal is expected to close by the fourth quarter, and it seems like the stock price elevator isn’t going much higher.

Financial Flashback: In short, Squarespace’s 2023 full year earnings results were like a blockbuster movie, reporting revenue of $1.01 billion, up 17% YoY and a net loss of just $7.1 million, a dramatic drop from 2022’s loss of $252.2 million. And the cherry on top? The company’s cash flow from operating activities increased 41% to $231.1 million.

Wall Street Whispers: Shares of Squarespace’s competitor Wix.com (WIX) have rallid over 5% off the back of this news, while Shopify (SHOP) played it cool and stayed mostly flat. Squarespace’s main privately-owned rival is WordPress, who’s probably watching all this unfold with popcorn.

INTERNATIONAL MARKETS

Investors Are Bidding Up UK Stock Prices📈

Bargain Mania: Despite the UK’s long-term underperformance relative to its American and European peers, the UK’s broad indices have been hitting the gym and are now outperforming US stocks for the past 7 weeks. The FTSE 100 index is now up almost 9% since March 20th, while the S&P 500 is taking a slight nap.

It’s About Time: As famous rap artist Russ once put it “I was in the dark for so long, I deserve all my shine,”. The UK’s stock market has been the underdog, given the UK’s economic rate of recovery since the end of the pandemic, drastically underperforming the US’ growth in GDP. But just like a good underdog story, the UK has managed to dodge the recession bullet and is now catching the eye of many investors. US stocks on the other hand, have rallied into the skies off the back of strong US economic performance, leading many investors to believe that they’re priced to perfection.

Cheap as Chips: The UK’s FTSE 100 index is trading at a trailing price-to-earnings ratio of 14, making it the thrift shop of the developed markets. Deutsche Bank has even labelled the FTSE 100 as its “favorite index in Europe”. There are a few hidden treasures trading on the London stock exchange, but our favourite by far is the CRM provider Cerillion (CER). The only fly in the ointment is AstraZeneca (AZN), the largest constituent in the index, especially given its recent announcement that it’s halting global production of its COVID-19 vaccination.

Priced to Perfection: To put the UK market’s valuation into perspective, the S&P 500 index is currently trading at 20 times next twelve months earnings (NTM), which is already above its 10-year average of 18 times NTM earnings. The equivalent paying for a luxury car when you’re only getting a beat-up, vintage pickup truck.

MORE NEWS

Additional market-moving events🌎

Leader Leaves: Freetrade, the UK’s version of Robinhood, says its CEO is stepping down with immediate effect and will be replaced by the company’s CFO. (CNBC)

JNJ exits Kenvue: Johnson & Johnson are set to offload its remaining 9.5% stake in consumer health business Kenvue, worth roughly $3.75 billion, bringing its divestiture to a conclusion. (Fierce Pharma)

Chip Money Printer: American Chipmaker Intel are now in advanced talks with Apollo Global Management for over $11 billion to fund a new chip factory in Ireland. (WSJ)

Shein IPO: Sheino’s US IPO attempts have reached a significant hurdle after the retail giant’s attempts to join the National Retail Federation (NRF) have been rejected due to scrutiny over its supply chain and market practices. (PYMNTS)

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