GameStop, AMC slump to multi-month lows
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[BENGALURU] Shares of Gamestop and AMC Entertainment tumbled to multi-month lows on Monday as some investors appeared to sour on the names that had produced eye-watering gains earlier in the year.
Video game retailer GameStop was recently down about 11 per cent at US$141.74, briefly touching its lowest level since April, while movie theatre operator AMC slumped 14 per cent to US$23.64, a level last seen in May.
The sell-offs come amid declines in other buzzy assets, whose prices have in some cases been sliding for weeks as worries over a more hawkish Federal Reserve and a Covid-19 resurgence shake some corners of the market.
The ARK Innovation ETF was recently down 2.4 per cent and has dropped 25 per cent year-to-date as investors ditched the stay-at-home names that thrived during the lockdowns.
Rallies in GameStop and AMC captivated Wall Street earlier in the year and put a spotlight on the retail investors that helped drive the moves, often coordinating in forums such as Reddit's WallStreetBets. They are still up more than 600 per cent and nearly 1,000 per cent for the year, respectively.
Both companies have also had their share of unwelcome news in recent days. GameStop posted a bigger-than-expected quarterly loss last week, while top executives at AMC reported large stake sales, accelerating losses in the stocks.
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Online brokerage Robinhood Markets, another favourite among the retail crowd, dropped 5.6 per cent on Monday to US$19, a fresh post-IPO low. The company went public in July at US$38 per share.
VanEck Social Sentiment ETF, which tracks stocks based on social media traction, has tumbled about 13 per cent in the second half of this year and has dropped about 5 per cent since its debut in March.
Randy Frederick, managing director of trading & derivatives at Charles Schwab in Austin, Texas, believes retail investors may be running out of funds to invest in meme stocks and other assets, as government stimulus checks that helped fuel trading earlier in the year are depleted.
"People that have been investing in meme stocks have all their money in the market and there's not any more left."
REUTERS
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