GameStop stock plummets, AMC jumps as Reddit roils markets

More On:


Reddit traders have found a new target

Robinhood CEO explains why GameStop trading was restricted

Hedge fund manager hit in GameStop frenzy is expanding mega-mansion

Hollywood already eyeing movie about Reddit’s WallStreetBets

GameStop shares plunged Monday as Reddit’s favorite “meme stock” retreated from a rally that turned Wall Street upside down last week.

But AMC Entertainment and other stocks favored by the fast-growing WallStreetBets message board surged in a sign that retailers’ trading revolution is not over yet.

GameStop’s stock price rose in premarket trading before crashing nearly 35 percent to $212 after the opening bell. The shares were recently down about 16 percent at $272.20 on the heels of last week’s 400 percent explosion.

Rookie investors on Reddit encouraged each other to hold the volatile stock and continue their war on hedge funds that bet against the Texas-based video-game retailer — such as Melvin Capital and Steve Cohen’s Point72, which racked up massive losses last month thanks to the unprecedented short squeeze.

“The most important thing to remember is that they can play in the yard all they want,” one user named ccruzpach wrote on WallStreetBets Monday. “As long as we do what we need to do, which is hold and buy the dip, they are screwed.”

“IF RED LINE MAKE YOU SAD TAKE A BREAK,” wrote Kill1015, another member of the foul-mouthed forum.

The massive tumble came amid signs short-sellers were covering their bets against GameStop, putting pressure on the stock. Total short interest in the stock dropped to 39 percent of its free-floating shares from a whopping 114 percent in mid-January, Bloomberg News reported, citing IHS Markit data.

GameStop wasn’t the only stock to fall Monday after being pumped up by Redditors. Shares in headphone maker Koss plunged about 43 percent after climbing more than 19-fold last week, while retailer Bed Bath & Beyond dropped as much as 17 percent to $29.25 after rising as high as $53.90 on Wednesday.

But other “meme stocks” beloved by WallStreetBets climbed further — including AMC, the coronavirus-battered movie theater chain that only recently averted bankruptcy.

AMC shares surged nearly 30 percent to a high of $17.20, building on last week’s roughly 278 percent gain. Telecom giant Nokia, meanwhile, was recently up about 6 percent while former smartphone maker BlackBerry climbed 2.4 percent.

Robinhood continued to cap the number of shares in all of those companies — except Bed Bath & Beyond — that investors could buy on the stock-trading app Monday.

The startup began imposing those limits Friday after temporarily blocking traders from buying any GameStop shares, a move that sparked widespread outrage.

Robinhood CEO Vlad Tenev suggested Monday that the restrictions would gradually be relaxed but would not go away completely.

“I think there’s always going to be some theoretical limit,” Tenev told Tesla CEO Elon Musk on Clubhouse, an audio-streaming app. “I think the question is will the limits be high enough to the point where they won’t impact 99.9-plus percent of customers.”

Share this article:

Source: Read Full Article