GameStop (GME.US) and AMC Cinemas (AMC.US) declined for the second day in a row as the “meme” stock boom that swept the market earlier this week gradually faded away.
The Zhitong Finance App learned that GameStop (GME.US) and AMC Cinemas (AMC.US) declined for the second day in a row because the “meme” stock boom that swept the market earlier this week gradually faded away. Before the Thursday market, GameStop dropped as high as 18.28%, and AMC once fell 16.06%. As of press time, GameStop was down 14% and AMC was down 6%.
These stocks were fervently sought after by meme traders during the first two days of the week, but on Wednesday, the momentum waned, and the ensuing sharp drop erased the $11 billion market value of these stocks.
Matthew Tuttle (Matthew Tuttle), CEO of Tuttle Capital Management (Tuttle Capital Management), said, “It is difficult for this kind of stock without fundamental support to stay high without a continuous influx of investment.”
This sharp fluctuation is reminiscent of the heyday of meme stocks in early 2021, when retail traders seized the opportunities of GameStop and AMC and pushed both stocks to record highs. Keith Gill (Keith Gill) became famous in 2021 when he called on traders to besiege game stations on Reddit. Last Sunday, a post posted on his X account once again sparked this wave of “meme” stocks.
This week's sharp fluctuations made shorters uneasy, but compared to the popularity of 2021, this week's fluctuations were quite moderate. Game Station soared by more than 1,600% in January 2021, and the stock has yet to recapture the highest price it set at the time.
Tuttle said, “In the past of the pandemic, all you heard was HODL (meaning “hold”) and diamond players. I think all of this is over; they are smarter and understand how to trade these.”
According to analysts' estimates, AMC is not expected to be profitable until the holiday season. The current transaction price is 1,500 times its expected 12-month forward earnings. According to data compiled by Bloomberg, this value is the highest among US stocks with a market capitalization of over 1 billion US dollars.
Furthermore, AMC has taken advantage of the opportunity to cash out, announced that it has completed the previously announced on-market share issuance, and has reached a private share exchange and debt reduction agreement.
Sophie Lund Yates (Sophie Lund·Yates), chief stock analyst at Hargreaves Lansdown (Hargreaves Lansdown), said, “Valuations are still being artificially inflated, but these large single-day fluctuations are a reminder of the dangers of investors participating in speculative transactions.”