Source: Finance Association
① Game Station's stock price fell sharply by nearly 19% on Wednesday, the biggest one-day decline since 2021, while AMC fell 20%; ② These two stocks more than doubled in the first two days of this week, but Wednesday's decline erased the total market value of the two of them of about 3 billion US dollars, and the weekly increase was almost at a standstill.
Just as the S&P 500 index hit its 23rd all-time high during the year, and the Dow was nearing 40,000 points, many market traders discovered that in the overnight US stock carnival, some of the brightest “figures” of recent years were lacking: those are retail investors who only had a “second spring” in the past two days...
Market data shows that$GameStop (GME.US)$The stock price fell sharply by nearly 19% on Wednesday, the biggest one-day decline since 2021.$AMC Entertainment (AMC.US)$It was down 20%. These two stocks have more than doubled in the first two days of this week, but Wednesday's decline erased their total market value of about 3 billion US dollars, and this week's gains are almost at a standstill.
In addition to these two most typical retail stocks, several other famous influencer stocks also did not perform well on Wednesday: PV manufacturers$SunPower (SPWR.US)$It closed down about 29% on Wednesday.$Koss Corp (KOSS.US)$It closed down 19.2%,$BlackBerry (BB.US)$It closed down 6.9%.
The Waterloo-like trend of these stocks is clearly in stark contrast to the strength of the US stock market overnight after the CPI data was released. The S&P 500, Dow, and Nasdaq Composite hit record highs on the same day for the first time since March 21 on Wednesday. By the close, the S&P 500 had risen 1.2%, and the Dow had risen about 350 points, or 0.9%. The index was less than 100 points away from the 40,000 point mark.
Undoubtedly, the surge in influencer stocks mentioned above, which surged for two days, came to an abrupt end on Wednesday against the backdrop of no signs or even a sharp rise in the market as a whole. Inevitably, it is reminiscent of the crazy memories that enveloped the market during the “retail battle against Wall Street” in early 2021.
At the time, GameStop soared by more than 1000% in just a few weeks, and then a group with the sharpest sense of smell quickly closed out most of their profits. Game Station's stock price continued to fluctuate for several months before the retail fanaticism finally dissipated, but it still hasn't fully recovered to its early high.
This scene has also clearly shaken many retail investors: is this a new wave of retail stock trading, driven by the “leading brother” on social media, just a “two-day trip”?
“Take the lead” will take you on a two-day trip?
We have previously explained that the rise in influencer stocks in this round was driven by Keith Gill, the retail “leading brother” with the screen name “Roaring Kitty” (Roaring Kitty), returning to social media. Three years ago, it was Gill who actively posted on the Wallstreetbet section of the Reddit forum, encouraging a large number of US retail investors to pour into GameStop stocks, thus triggering the “retail investors emptied Wall Street” incident that shocked the world.
On Sunday night, an X account linked to Gill posted for the first time in almost three years: a picture of a man sitting in a seat leaning forward. Currently, many people are still keeping a close eye on Jill's X account, which has been posting obscure videos on a regular basis since Monday morning. The videos include clips from movies, TV shows, and TikTok, but there's nothing specific about the stock yet.
Regarding the current situation where retail investors are trading stocks explosively, eToro's global market strategist Ben Laidler said that the conditions that drove stock prices to soar like 2021 actually no longer exist.
“This is a different situation. The pandemic lockdown period is over. Most of consumers' excess savings have been spent. Although short positions in these stocks are not small, they are also much smaller than they were back then. Interest rates are much higher,” Laidler notes.
This is actually the same situation we mentioned in our Wednesday report. Compared to three years ago, Wall Street learned a long time ago, while retail investors in the US have no money, no space, and high interest rates. Marco Iachini, senior vice president of Vanda Research, wrote in a research report on Tuesday, “Today, quantification/hedge funds are better equipped to handle these situations. If any, we think they will participate in shorting with retail investors first, but they will also operate in reverse, and there is a high possibility that retail traders will collectively withdraw from these transactions before.”
Judging from transactions, as the general rise in US stocks gave investors more choices, the retail stock trading volume mentioned above on Wednesday was clearly not as high as the previous two days, showing a shrinking trend.
Of course, in terms of news, retail stock trading on Wednesday, especially AMC's decline, is unrelated to the news that AMC took advantage of the sharp rise in stock prices in the previous two days to announce additional issuance.
AMC revealed in a recent filing on Wednesday that it will issue 23.3 million shares to replace notes due in 2026, with a principal amount of $164 million. Affected by this, the increase in the price of AMC junk bonds increased. The privately traded shares were valued at $7.33 per share, based on the principal amount of the exchange and accrued interest. AMC closed at $5.48 on Wednesday.
editor/tolk