AMC Entertainment and GameStop shares dipped Thursday amid high-level meetings to discuss recent trading convulsions and as Reddit users argued furiously on the now-infamous WallStreetBets chatroom about whether to fold or fight.
GameStop shares are down 34%, extending Wednesday’s losses. AMC Entertainment has slipped 19%, and other stocks that were vigorously promoted on WallStreetBets starting last week are mostly lower as the broader market posted gains. A Reddit-fueled frenzy saw retail traders send select stocks soaring, disrupting financial markets and spreading panic among the talking heads on CNBC.
Scrutiny of order flow and possible funny business in the stock moves started in earnest Thursday as Treasury Secretary Janet Yellen was set to meet with officials from the Securities and Exchange Commission, the Federal Reserve, the New York Fed and the Commodity Futures Trading Commission. “We really need to make sure that our financial markets are functioning properly … and that investors are protected,” Yellen said today on Good Morning America.
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Separately, the House Financial Services Committee set a hearing for Feb. 18 titled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.” Officials from the SEC, the Financial Industry Regulatory Authority and the Depository Trust and Clearing Corp. are among those expected to testify.
Committee Chairwoman Maxine Waters (D-CA) has said she wants Keith Gill, a Reddit trader known as u/Deepf*ckingvalue, to appear at another panel, along with an executive from Reddit and Vlad Tenev, CEO of Robinhood. The overwhelmed online trading platform caused an uproar by restricting the sale of shares of GameStop and AMC.
The price surge squeezed shorts – investors who borrow stock, betting the price will fall. It’s being called a kind of populist revolution and has sparked a handful of movie projects already. But reports that at least one big hedge fund made $700 million in the melee has raised questions about who really won and who lost.
WallStreetBets postings today ranged from resigned to defiant as GameStop and AMC fell. One hopefully noted new executive hires Wednesday at the videogame seller. “Think about it like this, Gamestop appointed three new members to its management. Ryan Cohen is not fooling around. Once Gamestop starts publishing good results and steady growth, the shorts have no other option than to close their positions.” Of the two stocks that benefitted most from the concerted buying, GameStop and AMC, the former is seen as having weaker fundamentals given shifts in gaming and brick-and-mortal retail. How fast and strongly movie theaters will rebound post-pandemic is a more upbeat discussion.
“I sold all but 1 share of GME (in case there is some miracle) because the system is rigged, the hedge funds, the SEC and the treasury secretary are not going to stand by and lose billions to a sub reddit,” read one post.
“I know I’ll get a lot of hate for this but here are my thoughts regarding GME. I think GME has gotten attacked way too much for ordinary people to get in now,” read another.
“Stop f-cking selling! If you did buy it back at a lower price” and “I’m not a bot – still holding,” said two others.
Is it over? Not clear.
One WSB post noted the writer’s plans to buy one share each of AMC Entertainment and GameStop precisely at noon on Friday, suggesting that others join. That post was later deleted after a response in the thread — “Ignore anyone telling you to buy at a certain time. They’re either a bot, or a honey trap from the SEC. Reporting this post.”