GameStop stock plunges by 25% as meme rally loses momentum

Welcome to Extreme Investor Network, where we bring you the latest updates and insights on all things finance. Today, we’re diving into the recent turbulence in the market, particularly surrounding meme stocks like GameStop (GME) and AMC.

GameStop stock took a hit of over 25% on Wednesday, following a two-day rally that saw shares surge by more than 180%. Similarly, AMC stock also experienced a drop of over 25% after a 95% increase over the previous two days. Other heavily shorted stocks like SunPower (SPWR) and Beyond Meat (BYND) also faced declines.

One key player in this recent movement is Keith Gill, also known as “Roaring Kitty,” whose bullish stance on GameStop back in 2021 sparked the initial meme stock rally. Nicholas Colas, co-founder at DataTrek Research, noted that the recent trading action feels reminiscent of early 2021 when GameStop experienced a massive short squeeze.

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Despite the pain that short sellers endured during the original meme stock rally, short interest in GameStop remains high, with almost 24% of the float still being shorted. The recent squeeze-related short covering has led to significant losses for short sellers.

Experts like Ihor Dusaniwsky from S3 Partners have highlighted the resurgence of the meme trade, but Wall Street strategists are wary of a repeat of the 2021 madness. The meme frenzy from three years ago attracted a wave of retail traders, but industry leaders like Tom Sosnoff are cautious about drawing direct comparisons to the current situation.

On a more grassroots level, YouTuber Matt Kohrs emphasized the David vs. Goliath narrative that underpins the short squeezes, noting that GameStop symbolizes a movement against the perceived bias in the financial system.

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