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GameStop, AMC slip as meme stock rally runs out of steam

By Medha Singh

(Reuters) – Retail darlings GameStop and AMC continued their slide in premarket trading on Thursday amid euphoria over the return of “Roaring Kitty,” who was the central figure of the 2021 meme stock rally , fades.

Shares of struggling video game retailer GameStop fell 14% to $34 after surging as high as $64.83 this week while posting $1 billion in losses for short sellers, according to Ortex Technologies. The AMC movie theater chain lost 12% after an 88% gain since Friday’s close.

Despite Wednesday’s losses, both companies were among the three most traded stocks by retail investors during the session, according to JPMorgan data, a position they have held every day this week.

The stock’s sharp rise began after a series of posts from Keith Gill’s X account “Roaring Kitty,” whose bullish GameStop posts were behind the 2021 meme stock frenzy.

But unlike 2021, when Reddit users banded together to target short stocks that burned bearish hedge funds, this time around, institutional investors were also part of the meme stock mania, Vanda Research said. which tracks the flows of individual investors.

“Social media is being used more and more and professional investors know that, they are following that and trying to take advantage of it,” said Ben Laidler, global markets strategist at digital brokerage eToro.

“Even though there are more retail investors today, you don’t see this time continuing in the rally like you saw last time. Retail investors have been bitten twice as much shy after ending up losing a lot of money last time.”

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

Since his first post on Sunday, Gill has released dozens of cryptic movie clips per day on X.com. He did not respond to a Reuters request for comment on the meaning of those messages and whether he planned to take his investments public again.

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

GameStop’s retail purchases fell to $5.7 million in the previous session from $15.9 million on Tuesday, which was the highest this year, according to Vanda data.

Similarly, for AMC, daily retail receipts fell to $7.7 million on Wednesday, from $51 million the day before.

Other heavily shorted stocks that were bid on this week also fell Thursday. Tupperware fell 5% to $1.71, while US-listed BlackBerry lost 4.6%. Koss Corp slipped 8% to $4.57.

GameStop and AMC were among the ten stocks with the highest options volume on Wednesday, with the majority of traders purchasing call options, which bet on a stock going higher, according to data from Options Clearing Corp.

(Reporting by Medha Singh and Pranav Kashyap in Bangalore; Editing by Arun Koyyur)

News Source : finance.yahoo.com
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