TheCorporateCounsel.net

In case you missed it, meme stocks are having a moment again — so much so that the WSJ speculated that “online subcultures might have a permanent influence on the market.” But a number of factors are different this time around. Among them is the looming shift to T+1 settlement, which was motivated in part by the original meme-stock craze and should address the increased margin requirements that caused Robinhood to block purchases of meme stocks.

But that doesn’t lessen the extreme volatility meme stock attention can cause for a “mid-cap” company’s stock. This AP article notes that, despite no change in Game Stop’s prospects:

GameStop’s share price was swinging so sharply after the opening bell Monday that trading in the stock was halted nine times in just over an hour. On Tuesday, the movements for AMC Entertainment were even wilder, and its trading was halted 18 times by early afternoon.

This King & Spalding alert from the time of the original meme-stock craze in 2021 noted that affected companies responded in varied ways. It also addresses key considerations for issuers of meme stocks, including when public disclosure is advisable, what might happen at the annual meeting, the impact on equity incentive plans and, of course, important questions for capital raises or when insiders want to trade.

– Meredith Ervine