Meme stocks AMC and GameStop tumble to lowest levels in months as investors dump risky positions
Dado Ruvic | Reuters
Speculative trades including GameStop and AMC Entertainment were hit hard Monday amid a broad market sell-off, as investors dumped risky meme names after a head-turning year.
GameStop — once at the center of the meme stock mania, tumbled more than 12% during midday trading — bringing its month-to-date losses to nearly 29%. Shares of AMC fell 17%, pushing their monthly decline to over 32% and hitting their lowest level since June. Bed Bath & Beyond dropped 6.3%.
Other names that have been popular on Reddit’s WallStreetBets chatroom also saw steep losses this month amid the overall risk-off sentiment and heightened volatility. Clover Health and BlackBerry have plunged 16% and 10%, respectively, in December.
Still, Monday’s sell-off doesn’t make a huge dent in the meme stocks’ meteoric rallies this year. AMC shares are still up more than 970% on the year, and GameStop has a rally of over 630% in 2021 under its belt. The rally has pushed GameStop to the Russell 1000 Index of large-cap stocks from the small-cap Russell 2000.
Earlier this year, a band of retail traders coordinated trades on social media and managed to create huge squeezes in a slew of heavily shorted stocks. The short interest in these names has come down drastically after the jaw-dropping episode.
AMC shares dipped 7% on Friday, after CEO Adam Aron and CFO Sean Goodman sold significant portions of the stock. Aron sold another $9.65 million in AMC stock as part of his estate planning, after selling 625,000 shares of the company for around $25 million in November. He continues to hold around 96,000 shares, excluding about 2.9 million issuable in the future and based on performance targets.
The year-end selling could also be a sign that investors are losing patience, as AMC’s and GameStop’s turnaround plans fell short for many. As GameStop tries to transform from a brick-and-mortar chain into more of an e-commerce retailer, it has tapped a slate of new leaders — including former Amazon executives Matthew Furlong and Mike Recupero as CEO and COO, respectively.
However, GameStop’s new leaders have provided few details about their turnaround strategy and have yet to share an outlook.