Springfield, Illinois – GameStop Corp. shares took a significant hit as the company announced plans to potentially sell up to 45 million shares, causing a continued decline in the stock price that had previously surged due to meme-driven speculation. The shares plummeted by 25% in premarket trading following the company’s disclosure of a possible sale of class A stock through an open market agreement, alongside a decrease in preliminary first-quarter net sales. This downturn has reversed the stock’s recent impressive rally, which saw it spike by 179% earlier in the week.
GameStop reported that its preliminary first-quarter net sales ranged between $872 million and $892 million, a decrease from $1.2 billion in the same period the previous year. AMC Entertainment Holdings Inc., another company that experienced volatility recently, also saw a 9.9% drop in early Friday trading. AMC had taken advantage of its stock rally earlier in the week by exchanging shares to reduce its debt and completing an equity offering announced beforehand.
The trading frenzy that fueled the surge in GameStop and AMC stocks this week began to subside, as retail investors’ interest in these companies decreased. Data from Vanda Research indicated a decline in purchases of GME and AMC among retail investors. While GameStop saw around $5 million in inflows over the past two days, AMC’s inflows were notably low on Thursday.
The reemergence of “Roaring Kitty,” the online persona of Keith Gill, who had contributed to the retail buying frenzy in 2021, sparked the latest rally. However, the options activity for GameStop has declined, and AMC’s activity has dropped significantly from its peak on Monday. Analysts suggest that the current market conditions signal a potential downturn, with sentiment appearing increasingly fragile as flows deviate from exponential growth patterns and decrease rapidly.
Despite the recent fluctuations, GameStop and AMC remain under the spotlight as investors closely monitor their movements. The market continues to adjust to the changing dynamics of meme-fueled trading, as both retail and institutional investors navigate the evolving landscape of stock market volatility.