GameStop Corp (NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC) slumped on Wednesday morning, as the latest meme stock frenzy appeared to meet an abrupt end after all of two days.
Following a 74.4% rise on Monday and a 60.1% jump on Tuesday, GameStop fell 32.5% to US$32.89 in early trading.
AMC was down 28% at US$4.93 in the meantime, having climbed 78% and 32% on Monday and Tuesday respectively.
Both had appeared to rally in pre-market trading, with analysts' warnings of a sudden swing appearing to come to fruition.
“This is a trend driven by entertainment rather than company fundamentals, and so any investors considering hitching a ride should exercise extreme caution,” Hargreaves Lansdown's Susannah Streeter noted earlier in the day.
“Stocks which rocket up on pure speculation tend to drop back down to earth very quickly.”
Roaring Kitty, who sparked the latest rally through a return to X earlier in the week, had appeared to keep stoking up the craze with video clips on the social media site through Tuesday.
This included a snippet from the film ‘Braveheart’ sporting Mel Gibson’s famous “freedom” line, over which Roaring Kitty had captioned the name “GameStop”.
— Roaring Kitty (@TheRoaringKitty) May 15, 2024
Another featured the line: “I need your help. I can't tell you what it is, you can never ask me about it later, and we're gonna hurt some people” from The Town.
— Roaring Kitty (@TheRoaringKitty) May 14, 2024
In a similar fashion to the 2021 craze, retail traders had targeted a range of stocks being betted against by the likes of hedge funds through short positions.
This included BlackBerry Ltd and Beyond Meat Inc (NASDAQ:BYND), both of which had nudged up in pre-market trading on Wednesday before falling after the market opened.
As the latest round of favoured meme stocks tumbled down on Wednesday morning, Roaring Kitty again continued posting video clips to X, with one appearing to mock media speculation he was running GameStop.
Another featured a clip from "Ocean's Eleven", over which the former Massachusetts Mutual Life Insurance trader placed captions sporting a similar teasing style in regard to the latest frenzy.
— Roaring Kitty (@TheRoaringKitty) May 15, 2024