Market experts unveil what's really behind the meme stock craze

GameStop shares surged 30% Monday after ‘Roaring Kitty’ post

While you might’ve heard the latest GameStop gossip, some market experts are interpreting the meme stock craze as the very definition of froth.

"The retail investor that sits on the sidelines and watches Wall Street make money, maybe even watches their parents make money in the stock market, wants to play," Madison Ventures+ principal and managing director Mitch Roschelle said in a "Cavuto: Coast to Coast" panel on Monday. "But they want to do it their own way, so they jump on these meme stock bandwagons."

"They're meme stocks, they're rallying, or they're declining or they're rallying on the back of one or two influencers that suddenly, all [of] Generation Z are following like they have to be like them," Slatestone Wealth’s Kenny Polcari added.

GameStop shares jumped more than 30% on Monday after a new Reddit post from retail investor Keith Gill, also known as "Roaring Kitty" on social media.

DOW 40,000, GAMESTOP MEME CRAZE AND INFLATION HANGOVER

A screenshot posted by Gill showed a GameStop holding of 5 million, or 1.8% of its publicly available stock. It also showed $65.7 million worth of GameStop call options, which are typically bought to express a bullish view.

GameStop stock ticker at NYSE

Market experts react to GameStop's 30% share surge Monday on "Cavuto: Coast to Coast" and "The Big Money Show." (Getty Images)

It expires on June 21 at a strike price of $20, and the value appears to be worth about $116 million.

"If he decides to make a quick profit and dump it, he becomes the very thing that he's been sort of fighting against," Roschelle pointed out, "which is, he becomes the big gorilla that makes money and leaves the little guy in the lurch."

GameStop shares closed Monday hovering around $28, after hitting its daily high of $38 at the opening bell.

"What if he sold it up there at $43 in the pre-market session? Up 100%. Are you kidding me?" Polcari reacted. "You have to understand what you're buying. You have to understand the risk."

"I don't necessarily think there's anything so fraudulent about it," he continued, "because he's telling everyone what he's doing. It's not like he's hiding. But you have to just be careful, which is why I don't trade these stocks."

Ticker Security Last Change Change %
GME GAMESTOP CORP. 27.97 -0.61 -2.15%

Monday’s rally follows a previous stock surge in May, when Gill returned to social media after a three-year hiatus with a post depicting what appeared to be a gamer sitting on a chair.

Also speaking on "The Big Money Show," Monday, Kingsview Wealth Management CIO Scott Martin agreed with Roschelle and Polcari that he’s not buying into the meme stock craze.

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"This is kind of getting out of control," Martin said. "Now, I'm happy for Roaring Kitty. I'm glad that he got over the rabies or distemper that he had for the last couple of years, and came out and posted on Twitter and rallied the stock like crazy. It stuck."

"The point is this: are you buying GameStop because some kitty cat, feline guy tells you to…?" the CIO further posited. "For me, I like stuff that's a little more tried and true. So I'm going to avoid this one."

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FOX Business’ Daniella Genovese contributed to this report.

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