Ryan Cohen and Carl Icahn Meetup Energizes GameStop Bulls Amid Yet Another Bear Market Rally

Rohail Saleem
GameStop
Ryan Cohen and Carl Ichan

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

This bear market is about to enact yet another rendition of the ongoing Sisyphean play: extreme positioning sparks a technical rally, allowing retail investors to come out of hibernation, only to see the Federal Reserve hammer the budding risk-on sentiment so as to keep financial conditions tight, thereby curtailing aggregate demand in the economy in the hopes of slowing down the current inflationary impulse. As this now-familiar playbook acts out the script with admirable gusto, GameStop (NYSE:GME) bulls are focusing on an interesting meetup between two bigwigs.

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Before going further, let’s dissect the reasons behind the current bear market rally that is predictably benefitting high-beta stocks such as GameStop. Recently, reports emerged that retail traders bought 3x as many puts as calls last week, illustrating the extreme bearishness that pervaded throughout the market after inflation in the US again accelerated in September and UK descended further into a dysfunctional abyss.

Of course, SpotGamma disagreed with the conclusion that retail traders had gone haywire for puts last week.

Regardless of the accuracy of the retail put-buying binge last week, this data snippet was widely disseminated and has affected the investor psyche. Then add to this perceived extreme positioning the fact that earnings so far have been fairly resilient.

Also, consider the fact that the US consumer is also faring relatively well, with spending in the first 2 weeks of October recording a healthy growth of over 10 percent on an annual basis, as per the assessment by the CEO of the Bank of America, and you have a perfect recipe for an explosive rally not only in blue chip stocks but also those constituting the most shorted basket, including GameStop and AMC Entertainment. Crucially, Morgan Stanley’s Michael Wilson has now stated that the technical elements, particularly the 200-day moving average for the S&P 500 index, will continue to favor the ongoing broad-market rally unless earnings estimates are slashed, or we land in a recession. With the probability for both of these two eventualities remaining subdued for the moment, GameStop and other high-beta meme stocks are benefitting from this ongoing easing impulse.

A Meetup Between GameStop’s Ryan Cohen and Carl Icahn: Is Something Cooking Behind the Scenes?

Ryan Cohen, the chairman of GameStop, recently tweeted a picture where he can be seen standing alongside the billionaire investor Carl Icahn, who is perhaps best known for his contrarian investment style. Of course, Icahn is the person who eviscerated Bill Ackman’s much-publicized short position in Herbalife a few years back. In the aftermath of this high-stakes feud, Ackman had stated that he would no longer short individual stocks. Given the thesis of GameStop bulls that the stock is being manipulated by short-sellers, it is hardly a surprise that Icahn remains a popular figure in the meme stock lore.

Soon after Cohen’s tweet, GameStop bulls unleashed a frenzy of speculation as to the purpose behind this meeting, with Reddit threads popping up with admirable alacrity. Of course, against the backdrop of the ongoing bear market rally, GameStop bulls might well have been searching for an ephemeral thesis to peg their bullish hopes on, with this meeting acting as a catalyst for a firestorm of speculation.

So, is Carl Icahn about to acquire a stake in GameStop? We don’t know yet. But the ingenuity of Redditors in connecting dots remains unparalleled, in my opinion, and such speculative posts do constitute an interesting reading material if nothing else. Meanwhile, the meme stock saga continues.

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