Retail investor favorites GameStop and AMC continued to fall for a second straight day in Thursday trading as excitement over the social media return of Roaring Kitty, a central figure in the 2021 meme stock rally, faded.
Shares of video game retailer GameStop fell 17% to $32.60 after soaring this week to $64.83. Theater chain AMC has fallen 11% since Friday’s close, after rising 88%.
Despite Wednesday’s losses, both companies were among the top three most traded stocks by retail investors during the session, according to JPMorgan data.
Both stocks rose in the week following a series of posts from Keith Gill’s X account “Roaring Kitty,” in which bullish calls for GameStop were the reason for the meme stock frenzy in 2021. I was to lose half of the profits I made in the first two sessions. .
But unlike in 2021, when Reddit users banded together to target short-selling stocks that scorched bearish hedge funds, this time institutional investors were also part of the meme stock mania, tracking individual investor flows. Vanda Research said.
“Three years ago, the short sellers were completely surprised by the size of the large purchases and were ultimately blown away by the size of the short sales,” said Rick Meckler, a partner at Cherry Lane Investments.
“They probably learned from that experience and reduced their exposure, thereby reducing the likelihood of long-term upward pressure.”
Short sales of GameStop and AMC, or bets that the stocks will fall, were largely flat this week, according to analysis firm Ortex Technologies.
Short sellers took unrealized losses worth $1.14 billion this week on bets against the two troubled companies, and are expected to make a paper profit of just about $460 million on Thursday.
Meanwhile, hedge fund Renaissance Technologies significantly increased its long position in AMC in the first quarter, betting on a further rise in GameStop stock.
GameStop stock is still nearly 70% below its 2021 high, while AMC, which hit an all-time low last month, is down 98% from its all-time high.
Since his first post on Sunday, Gill has published more than 50 movie clips per day on X.com.
He did not respond to a Reuters request for comment on the meaning of his post or whether he plans to make his investments public again.
Jay Clayton, former SEC Chairman told CNBC On Wednesday, he said those posts “created a wave of euphoria and speculative buying in the retail (trading) community, which is never a good thing,” and that it’s not illegal to say “I like stocks.” he added.
Other high-short stocks that were bid this week fell on Thursday. Tupperware fell 6%, while U.S.-listed BlackBerry and SunPower each fell about 2%.
Option traders flooded
Options trading continued to be strong. GameStop and AMC were among the top 10 stocks with the most options volume on Wednesday, with the majority of traders buying call options betting their stocks would rise. data Information from Options Clearing Corporation was presented.
However, JPMorgan strategists said in a note that the pace of margin borrowing by U.S. investors has been subdued compared to the GameStop short squeeze in January 2021.
“Retail investors have been twice embarrassed because they lost a lot of money in the last round,” said Ben Laidler, global market strategist at eToro, a digital brokerage firm.
“There are more individual investors today, but we don’t see that leading to an increase this time like last time.”
