As an investor, you’re always looking for the next big opportunity in the stock market. Lately, you may have heard about the frenzy surrounding meme stocks like GameStop and AMC. These companies have seen incredible volatility in their share prices, with huge gains one moment and steep losses the next.
GameStop and AMC shares fell recently, signaling a downturn in the meme stock trading frenzy. GameStop dropped 29% while AMC fell 22%. Both stocks had seen significant gains earlier in the week, but the retail interest in them seems to be waning.
AMC’s sell-off was triggered by a debt-for-equity swap, where the company issued 23.3 million shares in exchange for bonds worth $163.9 million. This move, along with a $250 million stock sale, led to a drop in the stock price. GameStop and AMC both experienced massive rallies and increased trading volumes at the start of the week, but this time around, retail interest is much lower compared to previous spikes.
In the past, GameStop and AMC saw daily retail trader inflows of $87.5 million and $170 million respectively. However, the recent inflows of $15.8 million and $37.5 million pale in comparison. The meme stock phenomenon seems to be losing steam, with enthusiasm fading as quickly as it peaked.
The resurgence of meme stocks was fueled by a social media update from “Roaring Kitty,” also known as Keith Gill. Gill, a former marketer, gained fame for leading a group of day traders in buying GameStop stock back in 2021. However, not everyone is a fan of the meme stock craze, as Smead Capital Management CEO Cole Smead described it as “frankly stupid” and akin to gambling.
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