GameStop, AMC shares slide for 2nd straight day as meme-stock rally fizzles

Retail darlings GameStop and AMC continued their slide for a second straight session on Thursday, as the euphoria over the return of “Roaring Kitty,” who was the central figure in the 2021 meme stock rally, peters out.

Shares of the struggling video game retailer GameStop fell 12% to $34 after jumping as much as $64.83 this week, while fetching $1 billion in losses for short sellers, according to Ortex Technologies.

Theater chain AMC shed 5.5% following an 88% gain since Friday’s close.

business, amc entertainment, gamestop, memes, stock market, stocks, gamestop, amc shares slide for 2nd straight day as meme-stock rally fizzles
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Keith Gill aka “Roaring Kitty” was the central figure in 2021 meme stock rally. AP

Despite the losses on Wednesday, the two companies were among the top three most-traded shares by retail investors during the session, data from JPMorgan showed.

The sharp surge in the shares began after a series of posts from Keith Gill’s X account “Roaring Kitty,” whose bullish posts on GameStop was a reason for the 2021 meme stocks frenzy.

But unlike 2021, when Reddit users banded together to target highly shorted stocks that burnt bearish hedge funds, this time institutional investors too were part of the meme stock mania, Vanda Research, which tracks retail investor flows, said.

“The short sellers three years ago were completely surprised by the magnitude of the mass purchases and ultimately overwhelmed by the size of the short squeeze,” said Rick Meckler, partner at Cherry Lane Investments.

“They have likely learned from that experience and left themselves less exposed thereby reducing the potential for extended upward pressure.”

Hedge fund Renaissance Technologies placed a new bet for GameStop shares to rise further and significantly increased its long position in AMC during the first quarter.

business, amc entertainment, gamestop, memes, stock market, stocks, gamestop, amc shares slide for 2nd straight day as meme-stock rally fizzles
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Shares of the struggling videogame retailer GameStop fell 12% to $34 after jumping as much as $64.83 this week. AP

GameStop stock was still nearly 70% below its 2021 peak, while AMC, which hit a record low last month, was 98% off its all-time high.

Since his first post on Sunday, Gill has put out more than 50 movie clips a day on X.com.

He did not respond to a Reuters request for comment on what the posts mean and whether he planned on making his investments public again.

Former SEC Chair Jay Clayton told CNBC on Wednesday the posts have triggered “a wave of euphoric and speculative buying in the retail (trading) community which is never a good thing,” adding that it was not illegal to say “I like a stock.”

Options activity remained strong. GameStop and AMC were among the top 10 securities with highest options volume on Wednesday, with a majority of traders buying call options, which bet on a stock’s rise, data from Options Clearing Corp showed.

The pace of borrowing for margin trading by US investors, however, has been restrained compared to the GameStop short squeeze in January 2021, JPMorgan strategists said in a note.

business, amc entertainment, gamestop, memes, stock market, stocks, gamestop, amc shares slide for 2nd straight day as meme-stock rally fizzles
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Hedge fund Renaissance Technologies placed a new bet for GameStop shares to rise further and significantly increased its long position in AMC during the first quarter. Christopher Sadowski

“Retail investors are once bitten twice shy after they ended up losing a lot of money last time round,” said Ben Laidler, global markets strategist at digital brokerage eToro.

“Even though there are more retail investors today, you’re not seeing that follow through into the rally this time as you saw last time.”

Other highly shorted stocks that caught a bid this week were choppy on Thursday. Tupperware fell 1%, while US-listed BlackBerry shed 2.3%. Koss slid 6% to $4.67.

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