GameStop, AMC shares decline as meme stock rally fizzles after just two days

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GameStop, AMC shares decline as meme stock rally fizzles after just two days



On March 16, 2023, a GameStop store opens in a Chicago shopping center.

Scott Olson | Getty Images

GameStop And AMC Stocks fell premarket on Wednesday as the meme stock trading frenzy showed signs of waning.

The brick-and-mortar video game retailer fell 13% in premarket trading, while the movie theater chain posted a 12% decline. Before Wednesday, GameStop and AMC were up 179% and 135%, respectively, this week.

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AMC Entertainment

The selloff in AMC shares came after the company announced a debt-for-equity swap. AMC will issue 23.3 million shares in a debt-to-equity exchange for $163.9 million in bonds due 2026. The company also completed a $250 million stock sale on Monday.

The two meme stars both enjoyed stunning rallies and an explosion in trading volume earlier in the week, but this time retail interest appears to be much smaller and short-lived. In terms of retail net inflows, it pales in comparison to the epic mania three years ago.

For example, GameStop and AMC saw net inflows from retailers of more than $15.8 million and $37.5 million, respectively, on Monday, data from Vanda Research shows. However, this is dwarfed by the daily peak inflows of approximately $87.5 million for GameStop and $170 million for AMC seen in late January 2021.

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GameStop

The speculative run was reignited Monday by a rare social media update from “Roaring Kitty.” The man, whose legal name is Keith Gill, posted a picture of a video game player sitting forward in his chair on the social media platform

Gill, also known as DeepF——Value on Reddit, is a former Massachusetts Mutual Life Insurance marketer who led a host of day traders to join GameStop back in 2021.

The return of the meme stock phenomenon sent shares of GameStop and AMC soaring over 70% on Monday, with the stock extending its gains into Tuesday. Towards the end of the last session the enthusiasm seemed to wane.

Cole Smead, CEO of Smead Capital Management, described the meme stock hype as “frankly stupid” and said on CNBC’s “Street Signs Europe” that it was a “gamble.”

—CNBC’s Alex Harring contributed reporting.



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2024-05-15 13:19:46

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