Meme Stock Surge 'Bothers' Former SEC Chair As GameStop, AMC Shares Rise Nearly 80% On Tuesday: 'A Lot Closer To Gambling…Certainly Not Investing'

Jay Clayton, the former chair of the Securities and Exchange Commission (SEC), has voiced his apprehension regarding the recent surge in GameStop Corp. GME and AMC Entertainment Holdings Inc. AMC stock prices.

What Happened: Clayton, in an interview with CNBC on Friday, expressed his concerns about the recent surge in the stock prices of GameStop and AMC. The former SEC chair suggested that the recent stock surge is more akin to gambling than trading or investing.

“It bothers me. It bothers me on many levels…It is a lot closer to gambling than it is to trading and certainly not investing,” Clayton said in the interview.

He also questioned the validity of social media posts, particularly tweets, as investment advice.

“Is a tweet really investment advice? I think we’ve learned the last five, six, seven years that a tweet is really never investment advice,” he added.

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Why It Matters: The recent surge in GameStop and AMC stock prices has sparked a debate within the financial community. The surge, which saw GameStop’s stock price soaring by 147% and AMC’s by 121% in pre-market trading on Tuesday, has been attributed to a resurgence of the meme stock phenomenon that first gained attention in early 2021.

Financial analysts have viewed this resurgence as a speculative wave driven by retail investors coordinating through online platforms, highlighting the unpredictability and potential risk factors associated with such stocks.

Meanwhile, a financial expert has warned investors about the potential risks associated with meme stocks, particularly GameStop. He advised investors to be cautious and understand the motivations behind such investments.

On the other hand, CNBC’s Mad Money host, Jim Cramer, believes that the new meme stock rally is unlikely to slow down, with both GameStop and AMC poised for another strong session. Cramer suggested that both companies could use the stock surge to raise capital through public offerings.

Price Action: GME was trading 79% higher at $54.44, while AMC was up 96.75% at $10.29 at the time of writing, according to data from Benzinga Pro.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.