The major U.S. market indexes closed a bit mixed Monday, with the S&P 500 up 0.3%, the Nasdaq Composite up 0.1%, and the Dow Jones industrials down 0.1%. Consumer cyclicals (up 1.2%), tech (up 0.9%, and communications services (up 0.7%) led, while utilities and health care (both down 0.7%) were the big losers.
Of more interest, perhaps, was the U.S. Securities and Exchange Commission (SEC) report on the meme stock revolution that occurred in late January. The SEC essentially punted, finding that markets mostly functioned as expected, and concluding that the report identified “market structure and our regulatory framework for potential study and additional consideration.”
To cite one area for further consideration, here’s what the report concluded regarding digital engagement and payment for order flow:
Consideration should be given to whether game-like features and celebratory animations that are likely intended to create positive feedback from trading lead investors to trade more than they would otherwise. In addition, payment for order flow and the incentives it creates may cause broker-dealers to find novel ways to increase customer trading, including through the use of digital engagement practices.
Now, back to the news. GameStop Corp. (NYSE: GME) was among the most frequently discussed stocks on WallStreetBets Monday, largely because it was a major player in the meme stock share price run-up of last January. The stock added about 1.5% and traded up by a like amount in Tuesday’s premarket. Trading volume was about half the daily average of 2.8 million shares and the company had no specific news Monday.
AMC Entertainment Holdings Inc. (NYSE: AMC) was another beneficiary of the January share price run-up, and the stock added about 5.6% on Monday, again on relatively light volume of almost 50 million shares, about a third lower than the daily average. AMC on Monday announced open-captioned screenings in selected theatres. We covered that in our midday report Monday.
Camber Energy Inc. (NYSEAMERICAN: CEI) added about 1.5% on Monday, likely due in part to a comment at InvestorPlace by Louis Navellier who suggests that investors in penny stocks like Camber take short seller reports like the one Kerrisdale Capital laid on Camber with a grain of salt. This is an interesting piece because it focuses on Camber’s acquisition of Simson-Maxwell, a deal Navellier thinks makes the oil and gas company more attractive to ESG investors. Kerrisdale dismissed the acquisition as “nearly worthless.”
SoFi Technologies Inc. (NASDAQ: SOFI) posted a share price gain of almost 7.6% on Monday and added nearly another 1% in Tuesday’s premarket. Trading volume was more than double the stock’s daily average of about 23.3 million. The company had no specific news, but options trading was robust Monday, and 32,000 October 22 $21 call options were in the money before the market opens. Shares were trading at $21.03.