GameStop and AMC shares fell in premarket on Wednesday as the meme stock trading frenzy appeared to be losing steam. The brick-and-mortar video game retailer fell 13% in premarket trading, while the movie theatre chain dropped 12%. Before Wednesday, GameStop and AMC had seen significant gains of 179% and 135% this week, respectively. The sell-off in AMC shares came after the firm announced a debt-for-equity swap, issuing 23.3 million shares in exchange for $163.9 million of bonds set to mature in 2026. AMC also completed a $250 million stock sale on Monday.
The meme stars GameStop and AMC had seen massive rallies and trading volume increases at the beginning of the week, but this time around, retail interest seemed smaller and short-lived. In terms of net retail trader inflows, the recent activity pales in comparison to the epic mania seen three years ago. For example, on Monday, GameStop and AMC saw net retail trader inflows of more than $15.8 million and $37.5 million, respectively. However, these figures were dwarfed by the peak daily inflows of about $87.5 million for GameStop and $170 million for AMC seen in late January 2021.
The speculative run for GameStop and AMC was reignited on Monday by a rare social media update from “Roaring Kitty.” Keith Gill, also known as DeepF——Value on Reddit, is a former marketer for Massachusetts Mutual Life Insurance who led day traders into GameStop back in 2021. Gill’s social media post featuring a meme used by gamers to indicate serious gameplay resulted in GameStop and AMC shares surging over 70% on Monday, with gains continuing into Tuesday. However, enthusiasm appeared to be waning by the close of the previous trading session.
Smead Capital Management CEO Cole Smead criticized the meme stock craze as “frankly stupid,” likening it to gambling in an interview on CNBC’s “Street Signs Europe.” Smead’s comments reflect a growing sentiment among some market participants who view the meme stock phenomenon with skepticism. Despite the recent resurgence in GameStop and AMC shares, it remains to be seen whether the meme stock trading frenzy will sustain its momentum or fade away as quickly as it began. As the market continues to evolve, investors and analysts will be closely monitoring the trends and developments surrounding these volatile stocks.
