GameStop, AMC slide as meme stocks rally loses steam (updated)

BlackBerry

16/05/2024 12:45

(Adds analyst comment in paragraphs 6-7, short seller losses in
paragraph 2, options data in paragraph 14; updates prices
throughout)
    By Medha Singh
       May 16 (Reuters) - Retail darlings GameStop  GME.N  and
AMC  AMC.N  continued their slide into premarket trading on
Thursday, as the euphoria over the return of "Roaring Kitty",
who was the central figure in 2021 meme stock rally, fizzles
out. 
    Shares of the struggling videogame retailer GameStop fell
14% 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 12% following an 88%
gain since Friday's close.
    Despite the losses on Wednesday, the two companies were
among the top three most-traded shares by retail investors
during the session, data from J.P.Morgan showed, a position they
have held every day this week.
    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.
    "There's more use of social media and professional investors
know this, they're tracking this, and they're trying to take
advantage of this," 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. Retail investors are once bitten twice shy after
they ended up losing a lot of money last time round."
    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 dozens of
cryptic movies 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 U.S. 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".
    Retail purchases of GameStop eased to $5.7 million in the
previous session from $15.9 million on Tuesday, which was the
highest this year, Vanda data showed. 
    Similarly, for AMC, daily retail inflows dropped to $7.7
million on Wednesday from $51 million in the previous day.
    Other highly shorted stocks that caught a bid this week also
fell on Thursday. Tupperware  TUP.N  dropped 5% to $1.71, while
U.S.-listed BlackBerry  BB.N  shed 4.6%. Koss Corp  KOSS.O  slid
8% to $4.57.
    GameStop and AMC were among the top ten securities with
highest options volume on Wednesday, with majority of traders
buying call options, which bet on a stock's rise, data from
Options Clearing Corp showed.

 (Reporting by Medha Singh and Pranav Kashyap in Bengaluru;
Editing by Arun Koyyur)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; X, formerly
Twitter: @medhasinghs;))