The highly volatile meme stock trading frenzy took a hit on Wednesday as both GameStop and AMC shares saw a significant decline in their value. GameStop, the brick-and-mortar video game retailer, dropped by 29%, while AMC, the movie theater chain, experienced a 22% decrease. Prior to this decline, both companies had seen a substantial increase in their stock prices, with GameStop up by 179% and AMC up by 135% earlier in the week.
The sell-off in AMC shares was spurred by the company’s announcement of a debt-for-equity swap. AMC revealed that it would be issuing 23.3 million shares in exchange for $163.9 million of bonds that are set to mature in 2026. Additionally, the company had completed a $250 million stock sale just the day before. This news contributed to the downward trend in AMC’s stock price.
Both GameStop and AMC had witnessed astonishing rallies and a surge in trading volumes at the beginning of the week. However, the latest wave of retail interest in these meme stocks appears to be smaller and short-lived compared to previous instances. Data from Vanda Research shows that net retail trader inflows for GameStop and AMC on Monday were significantly lower than during the peak of the meme stock mania in January 2021.
The resurgence of the meme stock phenomenon was ignited by a social media update from “Roaring Kitty,” also known as Keith Gill. Gill, a former marketer for Massachusetts Mutual Life Insurance, gained notoriety for his involvement in the GameStop trading frenzy of 2021. His recent social media post on the X platform, featuring a meme used by gamers to indicate serious gameplay, rekindled interest in GameStop and AMC stocks, driving their prices up by over 70%.
The recent decline in GameStop and AMC shares highlights the volatile nature of meme stock trading. While these companies experienced a brief resurgence in stock prices, the interest from retail traders seems to have dwindled. The unpredictability of meme stocks continues to be a key feature of the current market landscape.