GameStop and AMC shares fell in premarket on Wednesday as the meme stock trading frenzy showed signs of fizzling.
The brick-and-mortar video game retailer fell 13% in premarket trading, while the movie theatre chain dropped 12%. Before Wednesday, GameStop and AMC were up 179% and 135% this week, respectively.
The sell-off in AMC shares came after the firm announced a debt-for-equity swap. AMC will issue 23.3 million shares in a debt-for-equity exchange for $163.9 million of bonds that mature in 2026. The firm also completed a $250 million stock sale on Monday.
The two meme stars both experienced jaw-dropping rallies and explosion in trading volumes at the start of the week, but this time retail interest seems to be much smaller and short lived. In terms of net retail trader inflows, it pales in comparison to the epic mania three years ago.
For example, GameStop and AMC saw more than $15.8 million and $37.5 million, respectively, in net retail trader inflows on Monday, data from Vanda Research shows. But that is dwarfed by peak daily inflows of about $87.5 million for GameStop and $170 million for AMC seen in late January 2021.
The speculative run was reignited Monday by a rare social media update from “Roaring Kitty.” The man, whose legal name is Keith Gill, posted a picture on the X social media platform of a video gamer sitting forward on their chair — a meme used by gamers to indicate they are taking the game seriously.
Gill, also known as DeepF——Value on Reddit, is a former marketer for Massachusetts Mutual Life Insurance, who previously led a host of day traders piling into GameStop back in 2021.
The return of the meme stock phenomenon brought GameStop and AMC shares up over 70% on Monday, with the stock extending gains into Tuesday. Enthusiasm appeared to be fading by the close of the previous session.
Smead Capital Management CEO Cole Smead described the meme stock craze as “frankly stupid,” saying it’s “gambling” on CNBC’s “Street Signs Europe.”
— CNBC’s Alex Harring contributed reporting.