Meme Stock Rally Loses Steam As GameStop AMC Shares Plummet

The recent meme stock frenzy triggered by the return of influential trader Keith Gill aka “Roaring Kitty” to social media has fizzled out with shares of GameStop and AMC Entertainment experiencing significant drops late in the week. GameStop stock plunged 30% to close at $27.67 after soaring as high as $64.83 earlier in the week while AMC shares fell 15.3%.

“The short sellers three years ago were completely surprised by the magnitude of the mass purchases and ultimately overwhelmed by the size of the short squeeze,” said Rick Meckler partner at Cherry Lane Investments. “They have likely learned from that experience and left themselves less exposed thereby reducing the potential for extended upward pressure.”

Gill who spearheaded the 2021 day trader campaign against institutional investors betting on GameStop’s demise sparked the latest meme stock rally by posting a photo on X/Twitter on Sunday night his first post since June 2021. The image of a man leaning forward in his gaming chair a popular meme suggesting a gamer’s reengagement sent GameStop and AMC shares soaring.

However, the rally was short-lived with both stocks experiencing significant declines as the week progressed. Vanda Research which tracks retail investor flows noted that unlike the 2021 meme stock craze institutional investors were also involved in the recent hype.

Short sellers who bet on a stock’s decline suffered unrealized losses of $1.14 billion this week according to analytics firm Ortex Technologies. Meanwhile, hedge fund Renaissance Technologies had bet on GameStop shares rising higher.

Despite the brief resurgence GameStop stock has fallen more than 70% from its 2021 peak while AMC shares have plummeted 99% from their all-time high. The rapid rise and fall of these meme stocks highlight the volatility and unpredictability of such market phenomena.