Original title: should retail investors start to fall off the altar? The stock prices of the two ancestors of AMC and GameStop have been worrying recently.
Source: FX168
Shares of AMC Entertainment and GameStop, the most popular retail holding stocks, have been falling for days, with AMC closing at $45.07 on Wednesday, down 9.8 per cent, or 4.5 per cent, at $190.66.
Shares of AMC and GameStop have fallen about 20 per cent and 11 per cent respectively since the beginning of July as investor interest in the two stocks began to fade, and trading volumes for both companies have fallen, especially for AMC, which rose sharply last month.
AMC had a brief rally in the hours after Adam Aron, chief executive of AMC, tweeted on Tuesday that the company would abandon its plan to issue shares in 2021, but the plan faced a wave of opposition on social media. AMC shares then erased gains and closed lower on Tuesday, continuing to fall on Wednesday, when AMC's closing price was down about 18 per cent from Tuesday's high.
AMC was saddled with more than $4.5 billion in debt at the start of the pandemic, but with the rise of retail holdings, AMC took advantage of the opportunity to raise $1.25 billion by selling shares between April and June this year. Analysts say the stock has risen more than 2000 per cent since the end of 2020 and the company now has more than 3 million retail shareholders, accounting for 80 per cent of the shareholder base, up from 10 per cent at the start of the year.
Despite better-than-expected earnings, GameStop shares have been on a downward trend since its earnings meeting in June, disappointing some investors and analysts. Still, GameStop has not fallen to where it was during the April downturn, and GameStop shares are still up more than 1000% so far this year than they were before the retail frenzy began.
Retail traders who have made big bets on AMC with call options have posted their losses on the US forum Reddit, where the most popular posts lost more than $10, 000 because of AMC. But some comments point out that the user's call options do not expire until January 2022, so if prices soar again, losses are likely to recover.