GameStop and AMC shares tank after hopes of a 2021-style meme stock revival are shattered
Shares for the movie theater company and for the video game retailer fell 21% and 27%, respectively, as of Wednesday afternoon following a revival of meme stock mania that had sent shares of both companies skyrocketing in recent days. Another meme stock, Blackberry, fell 9% on Wednesday. This is amid all-time highs for the market.
The leader of the 2021 meme stock frenzy, day trader Keith Gill, known as Roaring Kitty on X and DeepF—ingValue on Reddit, returned to social media on Sunday after a multi-year hiatus. On Monday, Gill’s favorite trade, GameStop, started to climb and reached a peak of $64.83 on Tuesday, up from an intraday high of $20.20 on Friday.
Other day trader darlings, such as AMC and Blackberry, also came back to life this week riding a resurgence in meme stocks that was encouraged by members of Reddit’s WallStreetBets forum. AMC shot up to as high as $11.88 on Tuesday, up from an intraday high of $3.19 on Friday. Blackberry reached a high of $3.85 on Tuesday compared to an intraday high of $3.08 on Friday.
Still, the rally was stifled by news that AMC was taking advantage of its stock resurgence to secure new financing through a deal that dilutes investors’ shares.
The fall from grace shattered hopes of a meme stock revival just as two major indices, the S&P 500 and the tech-heavy Nasdaq, advanced 1% and 1.1%, respectively, to hit all-time highs on Wednesday. Fueling the rise were better-than-expected inflation numbers. The consumer price index of 0.3% for the month of April came in cooler than the 0.4% consensus estimate.
The S&P 500, which reflects the broader market, is up about 10% since January as investors are betting that the Fed will lower interest rates later this year.
Unlike the meme stocks, other favorite asset classes for day traders have performed well this year. After the SEC approved a dozen Bitcoin-tracking ETFs in January, billions of dollars have flowed to the financial vehicles. Bitcoin, in turn, notched an all-time-high in March and was trading up 46% year-to-date at $64,000 as of Wednesday. Gold has also hit several all-time-highs this year and was trading up 14% year-to-date as of Wednesday.
On Twitter, investing enthusiasts lamented GameStop and AMC’s declines, with some, as in 2021, putting the blame on financial institutions and bankers.
“Buy $AMC & $GME, these companies deemed “meme stocks” target the very worst market fraudsters the world has to offer,” one trader wrote on X.
