GameStop Corp. (GME), AMC Entertainment Holdings, Inc. (AMC), BlackBerry Limited (BB), and other companies popular among retail traders experienced a significant drop in their share prices on Wednesday morning.
After its shares soared over 130% earlier in the week, GameStop saw a 33% decline, bringing its price to $32.44 during Wednesday morning trading. This drop followed a two-day short squeeze that had previously caused GameStop's stock to rise more than 180% in just the two preceding sessions.
The surge in these stocks correlated with the social media reappearance of Keith Gill, also known as "Roaring Kitty," after a three-year hiatus. Gill, a key figure among meme stock traders, had famously turned a $53,000 investment in GameStop into a multi-million dollar stake, adding to the intensified excitement surrounding the stock.
Nicholas Colas, co-founder of DataTrek Research, drew parallels in a client note between recent trading activities and the events of early 2021. During that period, a short squeeze drove GameStop's stock up by 1,500% in January 2021, although the gains were largely retracted afterward.
Experts have been skeptical about the sustainability of this year's meme stock rally compared to that of 2021. Dan Egan, head of behavioral finance at investment advisor Betterment, commented in an email interview that the current rally appears to be more condensed in time. Egan explained that in 2021, factors such as low interest rates, surplus cash from stimulus checks, and people being confined at home due to the pandemic contributed to a prolonged rally — conditions that are not present in 2024.
As of now, GME's stock is trading at $39.15, reflecting a 19.76% drop on the New York Stock Exchange.
