A GameStop store operates in a Chicago mall on March 16, 2023.
Scott Olson | Getty Images
GameStop And Your mother Stocks fell on Wednesday as the meme stock trading craze showed signs of fading.
Shares of the traditional video game retailer fell 29%, while the movie theater chain fell 22%. Before Wednesday, shares of GameStop and AMC were up 179% and 135% this week, respectively.
AMC Entertainment
The heavy selling in AMC shares came after the company announced a debt-for-equity swap. AMC will issue 23.3 million shares on a debt-for-stock exchange in exchange for $163.9 million of bonds due in 2026. The company also completed a $250 million stock sale on Monday.
Both stars saw impressive rises and an explosion in trading volumes at the start of the week, but this time retail interest appears to be much smaller and short-lived. In terms of net retail flows, it pales in comparison to the epic mania of three years ago.
For example, GameStop and AMC saw more than $15.8 million and $37.5 million, respectively, in net inflows from retail traders on Monday, data from Vanda Research shows. But that's dwarfed by peak daily flows of about $87.5 million for GameStop and $170 million for AMC seen in late January 2021.
GameStop
The string of speculation was reignited on Monday by a rare social media update from Roaring Kitty. The man, whose legal name is Keith Gill, posted a photo on social media platform X of a video gamer sitting forward in his chair — an image players use to indicate they take the game seriously.
Gill, also known as DeepF——Value on Reddit, is a former marketer for Massachusetts Mutual Life Insurance, who previously led a group of day traders that converged on GameStop in 2021.
The return of the meme stock phenomenon sent shares of GameStop and AMC soaring more than 70% on Monday, with the stock continuing its gains into Tuesday. It seemed that the enthusiasm had faded with the conclusion of the previous session.
Cole Smead, CEO of Smead Capital Management, called the meme stock craze “frankly stupid,” saying it was a “gamble” on CNBC's “Street Signs Europe.”
— CNBC's Alex Haring contributed reporting.
