WATERLOO (dpa-AFX) - GameStop Corp. (GME), AMC Entertainment Holdings, Inc. (AMC), BlackBerry Limited (BB), and other companies favored by retail traders saw a sharp decline in their shares on Wednesday morning.
GameStop shares, which had surged over 130% earlier in the week, dropped by 33% to $32.44 during Wednesday morning trading. This decline followed a two-day short squeeze that had propelled GameStop stock up by more than 180% in the preceding two sessions.
The surge in these stocks coincided with Keith Gill, also known as 'Roaring Kitty', reappearing on social media after a three-year absence. Gill, a prominent figure among meme stock traders, had turned his $53,000 investment in GameStop into a multi-million dollar stake, contributing to the increasing hype surrounding the stock.
Nicholas Colas, co-founder of DataTrek Research, reflected in a client note that the recent trading activity resembled the early 2021 events when a short squeeze in GameStop was fueled, although the surge back then was significantly more substantial, with GameStop stock spiking by 1,500% in January 2021 before retracting most of those gains.
Experts had previously cast doubts on the sustainability of this year's meme stock rally compared to the one in 2021. Dan Egan, head of behavioral finance at investment advisor Betterment, noted in an email interview that the current rally appears to be more condensed in time. Egan pointed out that in 2021, low interest rates and the surplus cash from stimulus checks, combined with people being confined at home due to the pandemic, had contributed to the prolonged rally - circumstances not mirrored in 2024.
Currently, GME's stock is trading at $39.15, down 19.76% on the New York Stock Exchange.
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