GameStop, AMC tumble as two-day rally in meme stocks loses momentum

microsoft, black friday, gamestop, amc tumble as two-day rally in meme stocks loses momentum

FILE PHOTO: People enter a GameStop store during "Black Friday" sales in Carle Place, New York November 25, 2011. REUTERS/Shannon Stapleton/File Photo

By Medha Singh and Pranav Kashyap

(Reuters) -GameStop and AMC shares slumped on Wednesday, as a two-day rally sparked by the return of "Roaring Kitty" Keith Gill, who was the central figure in the 2021 meme stock frenzy, cooled.

Cinema chain AMC fell 25% after surging 135% in the past two sessions, while video game retailer GameStop tumbled nearly 30%, giving up nearly half of its gains from the same period.

Trading in the retail investor darlings were halted multiple times after the market opened, with investors exchanging more than $2.3 billion worth of GameStop shares.

That was more than the trading in technology heavyweights such as $2 billion worth of trades in Microsoft and $1.5 billion for Meta Platforms.

"While the meme phenomenon generates a lot of market engagement, which is ultimately a good thing...the volatility in these stocks is extreme," said JJ Kinahan, CEO of IG North America.

On Tuesday, "Roaring Kitty", the online persona of Gill, shared a clip from the movie "Braveheart" on X with the word "GameStop" flashing on the screen, as Mel Gibson, playing William Wallace, screams "freedom". Another video played Aerosmith's song "Back in the saddle again".

It is the first time that Gill named a company after his return to X following a three-year gap, which set off a rally in the highly shorted stocks and reminded investors of the 2021 retail trading frenzy.

In 2021, his YouTube streams and a string of Reddit posts had helped attract a flood of retail cash into GameStop, burning hedge funds that had bet against the company.

Gill did not respond to a Reuters request for comment on whether he was planning to resume posting about his trades on social media.

Gill has "became a hero of the common man.. he's having fun putting up these memes and we're interpreting them.. there's no science here", said Andrew Left at Citron Research, a former GameStop short seller.

Meanwhile, AMC disclosed in a filing it would issue 23.3 million shares in exchange for its notes due 2026 for principal amount of $164 million.

ROBUST TRADING ACTIVITY

Vlad Tenev, CEO of retail trading platform Robinhood, said on X the app hit $5 billion in equities trading volume on Tuesday, among the highest in the past 12 months.

AMC and GameStop were among the top 10 securities bought by retail investors on Tuesday, with $51 million and $16 million daily inflows, respectively, according to Vanda Research.

The two stocks have also seen strong options trading this week, with much of the action concentrated in bullish call options, which profit when stock prices rise.

Bill Gross, a billionaire once known as the "Bond King" after founding fixed income giant PIMCO, said the meme stocks frenzy was "definitely opportunistic" and his strategy was to "sell 400% annualised volatility", an options play.

Rising interest rates had cooled the meme stocks mania in the past two years, underlined by the shuttering of the Roundhill MEME ETF that invested in firms that exhibited a combination of elevated social media activity and high short interest.

(Reporting by Medha Singh and Pranav Kashyap in Bengaluru; Additional reporting by Lance Tupper in New York, Alun John in London; Editing by Sriraj Kalluvila and Arun Koyyur)

OTHER NEWS

10 minutes ago

As their customers age, Macy's, Kohl's and Nordstrom are chasing younger shoppers

11 minutes ago

Video: Frightening moment babysitter is caught shaking and pushing eight-month-old boy before being arrested

11 minutes ago

Video: Terrifying videos show tornadoes ripping through heartland as hail the size of baseballs rains down on Oklahoma

11 minutes ago

Video: The fightback begins: Boss of London's Queen Mary University tells pro-Gaza mob staging US-style campus protests he won't meet them until they've torn down their makeshift camp

11 minutes ago

Video: Now for the hangover! Manchester City stars face sore heads after their Premier League title celebrations ran until 5am - as new video shows them partying with their wives and girlfriends

12 minutes ago

Man United star opens up on his friendship with Cristiano Ronaldo as he insists the legendary forward is the 'most influential person' he has met in football

12 minutes ago

Essex and Warwickshire face intriguing finish

12 minutes ago

Andrea's It-List: 6 versatile pieces that will get you through the summer season

12 minutes ago

B1G 2024: Previewing the Nebraska Cornhuskers

12 minutes ago

Utility stocks are on a tear as an 'energy transition supercycle' lifts the entire sector

12 minutes ago

The best electric vehicle-friendly places to visit this summer

12 minutes ago

Aramco signs agreement with Pasqal to deploy first quantum computer in the Kingdom of Saudi Arabia

13 minutes ago

Horoscope Today: May 20, 2024

13 minutes ago

Newfoundland grandmothers can wail on the accordion. A historian wants them on stage

13 minutes ago

Archaeologists have just solved ancient Egypt's greatest mystery

13 minutes ago

On GPS: What Israel can learn from America’s actions in Iraq

13 minutes ago

Roy Keane pays tribute to ‘loyal and beautiful’ dog Jet after death of family pet

13 minutes ago

Why Did Buffalo Bills Slip in ESPN 'Power Rankings'?

13 minutes ago

Spacecraft looking for life on Mars beams back jaw-dropping crater images of planet

13 minutes ago

These 2 magnificent FTSE 250 shares are on sale right now!

13 minutes ago

Tesla staff left playing 'Squid Game' amid Elon Musk's ongoing layoffs

13 minutes ago

Forget Kieran McKenna for Brighton - hand-selected Roberto De Zerbi recommendation is a better fit

13 minutes ago

Nuggets' Game 7 choke job gives them dubious NBA record

13 minutes ago

Qatar has taken proactive steps to protect lives, ensure rapid response to emergencies: Al Khater

13 minutes ago

David Njoku Shares His Thoughts On Browns New Helmet

13 minutes ago

Phase 3 of Chiefs’ OTAs begins on Monday

13 minutes ago

New York Yankees vs. Seattle Mariners: Series Preview

14 minutes ago

Taiwan’s new President Lai Ching-te urges China to stop its military threats

14 minutes ago

Emmitt Smith ripped Florida for eliminating all DEI roles. Here's why the NFL legend spoke out.

14 minutes ago

Shares of Hims & Hers Health surge 30% after startup says it will offer GLP-1 injections

14 minutes ago

NBA Finals results and records by year throughout league history

15 minutes ago

OpenAI pulls ChatGPT AI voice over its resemblance to Scarlett Johansson in the movie ‘Her'

16 minutes ago

Cruise worker 'murders newborn son on board ship': Shocked co-workers raise alarm as ship sails off Tuscany

16 minutes ago

The ANTI-Gumball 3000: Inside the ramshackle rally dubbed the 'Burning Man for car geeks' where motorheads race busted $500 cars around the desert

16 minutes ago

Mississippi town's 'highway for the homeless' explodes in numbers as furious locals say they've lost neighborhood to the unhoused

16 minutes ago

A 30-minute run or 10,000 steps: Study reveals which is better for weight loss

16 minutes ago

The calm before the storm: Met Office issues yellow warning for thunder with floods and lightning set to batter Britain - but sunseekers take advantage of clear skies in the meantime by hitting beaches and parks

18 minutes ago

Molly-Mae Hague shares a look inside her sister Zoe's boozy Ibiza hen weekend complete with bikini-clad boat trips and lavish parties

18 minutes ago

Strictly star Giovanni Pernice's former partner Rose Ayling-Ellis 'admits she believes what others are saying' amid BBC probe into 'abusive behaviour' following contestant's complaints

18 minutes ago

Hundreds of nursing homes in Florida forced to close due to surging property insurance rates