GameStop, AMC tumble as meme stock rally fades after just two days

GameStop And AMC Shares fell on Wednesday as the meme stock trade showed signs of fizzled.

The brick-and-mortar video game retailer fell nearly 19%, while the movie theater chain fell 20%. Before Wednesday, GameStop and AMC were up 179% and 135% respectively this week.

The selloff in AMC stock came after the company announced a debt-for-equity swap. AMC will issue 23.3 million shares in an exchange for shares for $163.9 million in bonds maturing in 2026. The company also completed a $250 million stock sale on Monday.

The two meme stars both enjoyed breathtaking rallies and a boom in trading volumes at the start of the week, but this time the retail interest appears to be much smaller and short-lived. In terms of net retailer inflows, this pales in comparison to the epic mania of three years ago.

GameStop and AMC, for example, saw more than $15.8 million and $37.5 million in net inflows from retailers on Monday, respectively, according to data from Vanda Research. But that’s dwarfed by daily peak inflows of about $87.5 million for GameStop and $170 million for AMC in late January 2021.

The speculative run was sparked again on Monday by a rare social media move update from ‘Roaring Kitty’. The man, whose legal name is Keith Gill, posted a photo on the social media platform

Gill, also known as DeepF——Value on Reddit, is aa former marketer for Massachusetts Mutual Life Insurance, who led a large number of day traders pouring into GameStop earlier in 2021.

The return of the meme stock phenomenon sent shares of GameStop and AMC soaring more than 70% on Monday, with the gains extending into Tuesday. The enthusiasm seemed to have disappeared at the end of the previous session.

Cole Smead, CEO of Smead Capital Management, described the meme stock craze as “downright stupid” and said it’s “gambling” on CNBC’s “Street Signs Europe.”

– CNBC’s Alex Harring contributed reporting.