What happened
Shares of AMC Entertainment (AMC -2.01%) and GameStop (GME 0.10%) are both falling in morning trading Wednesday, dropping on no news specific to the meme stocks and running counter to the more ebullient broader market.
Where the movie theater operator was down 3.3% and the video game company was off 3.4% at 10:47 a.m. ET, the S&P 500 had made a 284-point jump, for a 2.3% gain.
So what
Both AMC and GameStop are coming off extended runs higher, but now extending losses over two days. AMC enjoyed a rally for six days, while GameStop saw its shares tear higher for nine.
The theater operator's surge followed its second-quarter earnings report and the announcement it would be issuing a new preferred stock for shareholders that would trade under the ticker symbol APE. AMC has said it will use the stock to raise money because it has a limited ability to do so under its common shares.
GameStop's run-up was part of a return of the meme stock frenzy, as fellow internet stock chatroom denizen Bed Bath & Beyond (BBBY) also saw its shares fly higher for nine days.
Now what
Because meme stocks tend to move more on social media mentions than on business fundamentals, this kind of volatility is not uncommon.
AMC Entertainment's investors, though, see the new preferred stock as a means of outwitting short-sellers who remain committed to seeing the theater operator's shares fall. In fact, AMC, GameStop, and Bed Bath & Beyond all remain heavily shorted stocks.
Some 18% of AMC's outstanding shares are sold short, as well as 24% of GameStop's and 42% of Bed Bath & Beyond's.
