Home Markets GameStop and AMC fall as meme stock rally fizzles out after just two days

GameStop and AMC fall as meme stock rally fizzles out after just two days

by SuperiorInvest

A GameStop store operates in a Chicago shopping center on March 16, 2023.

Scott Olson | fake images

Game stop and AMC Shares fell premarket Wednesday as the meme stock trading frenzy showed signs of fading.

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

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AMC Entertainment

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

The two meme stars saw stunning rallies and an explosion in trading volumes at the start of the week, but this time retail interest appears to be much lower and short-lived. In terms of net inflows from retail traders, it pales in comparison to the epic mania of three years ago.

For example, GameStop and AMC recorded more than $15.8 million and $37.5 million, respectively, in net inflows from retail traders on Monday, data from Vanda Research shows. But that is dwarfed by the daily peak inflows of around $87.5 million for GameStop and $170 million for AMC seen in late January 2021.

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Game stop

The speculative race was revived on Monday by a rare news story on social media. update from “Roaring Kitten”. The man, whose legal name is Keith Gill, posted a photo on social media platform

Gill, also known as DeepF——Value on Reddit, is a former Massachusetts Mutual Life Insurance trader, who previously led a host of day traders joining GameStop in 2021.

The return of the meme stock phenomenon sent shares of GameStop and AMC up more than 70% on Monday, and the stock extended its gains into Tuesday. The enthusiasm seemed to fade at the end of the previous session.

Smead Capital Management CEO Cole Smead described the meme stock craze as “frankly stupid,” saying it's a “gamble” on CNBC's “Street Signs Europe.”

—CNBC's Alex Harring contributed reporting.

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