As meme stock momentum fades, AMC, GameStop fall

Data Storage

07/07/2021 19:17

By Sinéad Carew
    July 7 (Reuters) - Shares in so-called meme stocks with a
following among retail investors lost ground on Wednesday, with
AMC Entertainment  AMC.N  shares down 8.1%, on track for their
fourth straight day of declines, and GameStop Corp  GME.N 
falling 4.9%.
    AMC, which fell almost 12% in the previous three sessions,
hit a record high of $72.62 in early June as members of social
media platforms including Twitter and Reddit's WallStreetBets
urged each other to buy the stock.
    The cinema operator, which on Tuesday scrapped a shareholder
approval request for an increase in the number of shares
outstanding, was trading at $45.91 after breaching its 30-day
moving average.
    AMC was still up about 2254% year-to-date but well below its
3624% peak gain.  urn:newsml:reuters.com:*:nL3N2OI3EI
    Shares in video game retailer GameStop traded at $189.79,
compared with its Jan. 28 record of $483 when investors betting
against the stock were forced to buy it to cover their bets as
retail investors piled in.
    GameStop shares have steadily declined since it announced
quarterly results and flagged upcoming share sales in early
June. It was last up 906% for the year-so-far compared with a
roughly 2464% peak gain.
    "The momentum is fading and the enthusiasm is fading," said
Michael O’Rourke, chief market strategist at JonesTrading in
Stamford, Connecticut. "They've been pushed well beyond the
appropriate fundamental valuation levels so we're starting to
see some air come out."
    Some other stocks such as Newegg Commerce  NEGG.O , up
120.0%, and Data Storage Corp  DTST.O , up 39.0%, were in demand
on Wednesday as they took their turn in the spotlight on forums
such as Stocktwits. 
    But other recent retail favorites were losing steam rapidly
with Bsquare  BSQR.O  down 29.8% and Orbsat Corp  OSAT.O  down
12.1%.
    "Yes people have made money but I also think there's a lot
of retail investors that have lost a lot of money being involved
in those names," said O'Rourke. "The most recent rally has run
it's course. I cannot predict the future but I do think the
longer this goes on the idea becomes less compelling."
    Meanwhile on Reddit's WallStreetBets forum, some investors
sounded anxious
    "Memes pls fly," wrote user Twoverybigwords00. 

 (Reporting By Sinéad Carew
Editing by Sonya Hepinstall 
Editing by Sonya Hepinstall)
 ((sinead.carew@thomsonreuters.com; +1 (646) 223 6186; Reuters
Messaging: sinead.carew.thomsonreuters.com@reuters.net))