Markets Defused aims to give an easy-to-understand and straightforward recap of the day’s most engaging stock market news.
- GameStop bears shorts pulled down
- AMC bankers closed a timely $250mln share sale
- Robinhood pulled higher by meme-stocks
- On boosted as running shoe sales impress
- Vodafone investors shrugged off Divi cut
- Flutter calls for end to stamp-duty on UK shares
GameStop bears shorts pulled down as meme-traders push up price (again)
GameStop Corp (NYSE:GME) shares were up more than 40% midway through Tuesday’s trading day as the so-called meme-stock trend kept going after sparking back to life in recent sessions.
As in 2021, a frenzy of so-called ‘meme’ trading appears to be executing a “short squeeze” which is pushing up the stock price and triggering heavy losses for the bearish traders betting against the video game retailer.
The buying activity switched into overdrive since social media user Roaring Kitty’, aka Keith Gill, resurfaced on social media with a series of cryptic internet meme videos that have evidently amplified the attentions of retail investors and have sent GameStop stock soaring.
At $45.06 today, GameStop is up close to 48% for the session – having seen as high as around $65 in early trade. The price is now up some 180% in recent days, from just under $16.00.
The GameStop rally has inflicted significant losses on short sellers who had reportedly been targeting the stock.
Market data, from Ortex, indicates that shorters stand to lose some $1.2 billion today alone, and their total losses amount to around $2.5 billion for the past month. Thi
Market experts caution against the volatility associated with such speculative trading, as they did in 2021, meanwhile, the rapid rise in price for the so-called meme-stocks continues.
AMC bankers closed a timely $250mln share sale
AMC Entertainment Holdings (NYSE:AMC) has completed a well timed $250 million stock sale as ‘meme-stock’ traders keeps pushing the share price higher.
According to a filing, some 72.5 million shares were sold on Monday at $3.45 each, a price that in retrospect looks meagre.
On one hand, the price was up more than 20% from Friday’s close.
But, on the other, AMC shares subsequently spiked to as high as $5.88 later on Monday. And today, the price sits at $8.04.
In other words, the stock bought by investors yesterday is today close to showing a three-fold gain.
The share offering was launched in March, as a means to pour fresh capital into the cinema company.
AMC in March said it would use the proceeds for general corporate purposes, to bolster liquidity, as well as to repay and/or refinance its debt.
At the end of March it held $624 million of cash and owed net debt of around $4.5 billion.
Wall Street investment banks Citigroup, Barclays, B. Riley Securities and Goldman Sachs handled the share sale.
Robinhood pulled higher thanks to GameStop and AMC
Robinhood Markets Inc (NASDAQ:HOOD) was another stock pulled higher by the retail trading frenzy that’s pushed GameStop and AMC to soar in price.
The company, which operates the popular smartphone stock trading app, saw its own share rise as much as 10% in Tuesday’s early dealing.
Changing hands at $17.97 by around midday in New York, Robinhood is up 6.3%.
Surging trading activity on the app, due to GameStop and AMC trading, would be expected to boost the firm’s current performance thanks to the uptick in deal volumes across the platform.
Robinhood last week reported quarterly financials which were boosted by a resurgence in Bitcoin trading.
It reported record quarterly revenue of $618 million, with crypto trading accounting for some $126 million of the tally. Net income amounted to $157 million for the quarter, versus a $511 million loss for the same period a year ago. On a per share basis, it equated to 18 cents.
This saw the company comfortably beat Wall Street forecasts for the quarter, which were pitched at $549 million for group revenue and just 6 cents per share earnings.
On stock boosted as running shoe sales impress
On Running parent company On Holding (NYSE:ONON) saw its shares sprint nearly 20% higher in Tuesday’s trading, as the shoe company reported better-than-expected quarterly financials.
The Swiss sportswear company, which teamed up with Roger Federer after he exited his Nike deal, putting it on the map, reported sales for the three months, ended 31 March, at $559.6 million (or 508 million francs) which compares to 420 million francs this time last year.
It posted earnings per share of 36 cents (0.33 francs), beating the 0.15 francs it made in the 2023 quarter.
Looking ahead, the company told investors that it expects to achieve at least 30% growth in sales over the full-year. The summer Olympics in Paris, held in July and August, is seen as a major sales catalyst.
In New York, On Holding was up $5.62 or 18.3% changing hands at $36.31 each.
Vodafone investors shrugged off divi cut
Vodafone Group PLC (LSE:VOD) shares traded higher, up nearly 5% to 73.40p, as shareholders shrugged off any disappointment of a dividend cut.
Instead, the market welcomed what was described as a pragmatic move that would help the telecoms firm pay down debt and make new investments aimed at unlocking growth.
“While painful, the cut looks a sensible move,” said Russ Mould, investment director at stockbroker AJ Bell.
It is expected that the divi cut will enable around €1 billion of debt to be reduced per year, albeit standing at €33.2 billion that debt pile remains substantial.
“From a share price perspective, less debt means less risk and less risk can mean a higher share price, or at least persuade investors to pay a higher multiple to access a company’s earnings and cash flow, all other things being equal.”