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GameStop Stock Plunges 25% as Meme Rally Fades
GameStop Stock (GME) plunged more than 25% on Wednesday as the rally among meme names showed signs of weakening. The video game retailer’s shares are emerging from a two-day squeeze. GameStop shares have gained more than 180% in the previous two sessions.
AMC Stock (AMC) also fell more than 25% on Wednesday after the theater chain operator rose 95% over the past two days.
Other heavily shorted stocks that fell on Wednesday included SunPower (SPWR), Beyond Meat (PORND) and the Children’s Place (PLCE).
GameStop shares rose on Monday after the resurgence of Keith Gillalso known as “Roaring Kitty”, whose positive case at GameStop triggered the 2021 meme stock rally.
In a note to clients, Nicholas Colas, co-founder of DataTrek Research, wrote that this recent trading action “feels like an echo of early 2021, when this account helped fuel a sharp squeeze on GameStop.”
Colas noted that the move back into 2021 was a little bigger than what we’ve seen so far this time around, with GameStop shares rising 1,500% in January 2021 before giving up most of those gains.
The pain that short sellers faced during the meme stocks’ original rally three years ago hasn’t stopped bets against these companies in recent days.
Keith Gill, known on social media forums as Roaring Kitty, testifies during a virtual hearing on GameStop in Washington on Feb. 18, 2021. (House Financial Services Committee via AP, File) (ASSOCIATED PRESS)
Short interest in GameStop has remained high since that meme rally, data from S3 Partners showed, at nearly 24% of the float.
GameStop short positions fell $1.36 billion on Tuesday after losing nearly $900 million on Monday.
“We are seeing continued coverage of squeeze-related selling due to the revival of meme trading,” said Ihor Dusaniwskymanaging director of S3 Partners.
On Tuesday, Wall Street strategists warned the new burst of enthusiasm It is far from the madness of three years ago, with “low” chances of repeating itself in 2021.
GameStop shares fell on Wednesday, indicating that the rally in meme names is slowing. (AP Photo/John Minchillo, File) (ASSOCIATED PRESS)
The meme frenzy three years ago attracted national attention, attracting an army of retail merchants during pandemic lockdowns.
“I don’t see it as I did in 2021, when it was almost a transformative moment, dragging, you know, tens of millions of people back into the market,” said Tom Sosnoff, CEO of tastelive, an options company and futures trading platform. .
On Tuesday, YouTuber Matt Kohrs, who has held roles at GameStop and AMC in the past, said the fundamental aspect of “the small versus the big” during the short squeezes of 2021 holds true today.
“The perception is that the entire system is configured and isolated to benefit the powerful elite. GME is the symbol of the populist movement against this concept,” said Kohrs.
“The only real change I see from a psychological point of view is not being locked in the house anymore,” he added.
The story continues
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter at @ines_ferre.
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