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Reddit shares close near record after two-day rally driven by meme stocks

·2 mins


Reddit’s Stock Jumps as Retail Traders Spark Meme Stock Frenzy #

Yesterday, Reddit experienced its second-highest closing since its IPO in March. The surge came after retail traders initiated a buying frenzy of meme stocks on Monday. Shares of GameStop and AMD saw significant increases in the past two days, doubling in value. Reddit’s stock rose by 7% on Tuesday, marking its second consecutive day of gains. The rally began when ‘Roaring Kitty’ reappeared online. This individual, also known as Keith Gill, was the driving force behind the meme stock mania earlier this year. Gill’s post caused GameStop and AMC shares to soar. The photo posted by Gill has been viewed over 25 million times.

Reddit played a significant role in the previous meme stock boom, largely influenced by the WallStreetBets forum, where traders gathered to share tips and collectively impact stock prices. After Gill’s post, GameStop mentions on WallStreetBets spiked on Monday, which further contributed to the rally. The surge in GameStop and AMC’s stock prices resulted from Gill’s post and his subsequent cryptic messages. In addition to GameStop and AMC, other stocks that are part of the meme stock group, such as BlackBerry, Koss, and SunPower, also experienced price increases.

While analysts note that there is no fundamental reason behind Reddit’s rally, they believe that increased user activity on the platform will benefit the company’s advertising business. The surge in users means increased impressions, translating into more ad revenue.

Since its IPO, Reddit’s stock has experienced some volatility. After debuting at $34 per share, it reached a high of $65.11 on March 26 but then fell to as low as $39.17 in April. The stock received a boost following Reddit’s better-than-expected earnings report earlier this month. The platform, founded 19 years ago, continues to garner attention as it navigates the world of retail trading and meme stocks.