Stock Market

As Super Bowl nears, Stocktwits CEO highlights ‘huge overlap’ between sports betting and meme stocks

As Americans focus their attention on Super Bowl betting this year, they’re expected to wager a record amount of money on Sunday’s game between the Kansas City Chiefs and the Philadelphia Eagles.

The American Gaming Association expects people to spend approximately $16 billion betting on the game, more than double the estimate for last year’s matchup between the Los Angeles Rams and the Cincinnati Bengals. The association also estimates that a record 50.4 million American adults will bet on the Super Bowl, a 61% increase from last year, fueled by the expansion of legal sports betting.

With that mind-boggling amount of money likely to be wagered on the Super Bowl, Rishi Khanna, CEO of Stocktwits, a social platform for investors and traders, told MarketWatch that there are plenty of comparisons between sports betting and meme stocks.

Related: At the Super Bowl, fans will be able to legally bet on the game on their phones — a first

“I think there’s a huge overlap among the audiences,” Khanna said. “Think about it. A trader and a sports bettor — it’s a game of risk and odds, it’s a game of numbers, it’s a game of math.”

Even as sports betting is on the rise, recent years have also seen the emergence of so-called meme stocks such as AMC Entertainment Holdings Inc.
GameStop Corp.

and Bed Bath & Beyond Inc.

that have been fueled by a social-media-driven trading frenzy. AMC, which had been scrambling to raise cash amid the economic fallout of the COVID-19 pandemic, was suddenly transformed into a meme-stock phenomenon. The company used the steep rise in its share price to tap into equity and debt markets, raising $917 million in January 2021. 

The Stocktwits platform grew 50% to more than 6 million users during the meme-stock mania two years ago.

Related: Bed Bath & Beyond equity offering ‘one of the most unusual financing situations we have witnessed,’ analyst says

Khanna said that Stocktwits’ demographic data backs up that overlap of sports betting and meme stocks. “I call sports and markets, specifically, two sides of the same coin,” he said, adding, “Outside of breaking news, these are the last two bastions where ‘live’ really matters.”

Meme stocks have been in the spotlight again this week. Bed Bath & Beyond’s stock rose 92% Monday in a move that swept up fellow meme stocks AMC and GameStop before pulling back. 

Last month, Bed Bath & Beyond announced that it may need to declare bankruptcy, sending the company’s stock sinking toward a 30-year low. That followed a turbulent few years marked by strategic missteps, cash burn, challenging underlying business trends and the impact of the COVID-19 pandemic. Bed Bath & Beyond also recently disclosed that it was in default on loans that were called in.

Also read: Bed Bath & Beyond making ‘last gasp’ to survive before filing for bankruptcy, says analyst, warning that the equity will eventually be wiped out

“I was a little surprised by Monday,” Khanna told MarketWatch. “But when you dig back into it, I do think that you have to take into account the covering of shorts — I think that played a big role in it.”

Surveying the last couple years of meme-stock activity, the CEO described AMC as a “fascinating outlier,” noting the high level of attention the stock receives. “That has been the number one most active ticker on our platform the last two years running,” he said. “The AMC community is a very unique community — the community arguably saved AMC on a liquidity basis.”

Khanna also pointed out that AMC CEO Adam Aron has “leaned into” the meme-stock community. “It’s marketing showmanship,” he added.

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