Meme Markets: Is The Latest GameStop Rally A Second Coming?

The last time meme stocks had a run was in late March, and it was owed to a host of catalysts.

Ryan Cohen announced a stake in Bed Bath and Beyond BBBY and purchased a shipment of GameStop Corp. GME shares. Around the same time, AMC Entertainment Inc AMC CEO Adam Aron revealed a significant stake in Hycroft Mining Holding Corp HYMC.

Tesla Inc TSLA was considering a stock split at the time, and over 25% of GameStop's float was sold short.

TradeZero In SEC Crosshairs: While there are no huge catalysts this week, retail traders saw good news about GameStop, the king of the meme stocks.

On May 24, Securities and Exchange Commission charged broker-dealer TradeZero America Inc and its co-founder Daniel Pipitone with falsely stating to the firm's customers that they didn’t restrict the customers’ purchases of meme stocks in January 2021 when in fact they did.

According to the SEC, TradeZero halted purchases for about 10 minutes. After the halt, TradeZero and Pipitone allegedly made misleading public statements via interviews, social media and in a press release to distinguish their company from brokers that restricted trading during that period.

The SEC dealt a penalty of $100,000 to TradeZero and a $25,000 penalty to Pipitone.

GameStop Trends Again: TradeZero and Pipitone aside, the current number of shorted shares in the GameStop float is roughly 26%. According to Benzinga Pro, the volume has averaged approximately 4.5 million over the last 100 days.

GameStop has been trending on social media for several days, and more than 6.3 million shares of GameStop were traded during Thursday's morning session, indicating a potential short squeeze.

On May 25, GameStop's "gain train" left the station, with the stock surging more than 27% during the trading session, dragging other stocks like AMC and Bed Bath & Beyond along with it.

Here are the stocks that have taken laps since May 25:

• GameStop Corp. GME
• AMC Entertainment Holdings Inc AMC
• Bed Bath & Beyond Inc. BBBY
• Koss Corporation KOSS
• BlackBerry Ltd BB
• Newegg Commerce Inc NEGG
• Hycroft Mining Holding Corporation HYMC
• Tesla Inc TSLA 

Meme stocks have a reputation for being extremely volatile. And given the scarcity of news this week, the upward trend in meme names could be interpreted as investors hunting for a short squeeze, akin to the January 2021 fiasco, which spawned an entirely new investor base.