GameStop Crashes Again, Dropping 42 Percent

Shares of GameStop dropped 42 percent on Thursday, as its social media-fueled rally continued to unravel.

It was the third crash in four trading sessions for the stock, which had become the symbolic heart of a quixotic online crusade to turn the traditional tools of Wall Street against some of its most sophisticated investors and make untold numbers of regular joes rich in the process.

But after a 31 percent rout on Monday and a 60 percent nosedive on Tuesday, Thursday’s rout seemed to convince many who frequented the online gathering places for stock traders that GameStop’s moment had passed. The shares are now down 84 percent this week.

“GME is dead,” wrote a commenter going by the handle “BoBo_HUST” on Reddit’s WallStreetBets forum on Thursday afternoon, referring to the stock’s ticker symbol.

AMC Entertainment, another “meme stock” whose time in the spotlight seems to be nearing an end, fell 21 percent on Thursday.

With eye-popping price rises and remarkably heavy trading, such stocks became the focal point for the market and broader public imagination last week.

That explosive rise — at its peak GameStop was up over 1,600 percent — was the result of a remarkable organizational campaign that sought to “squeeze” hedge funds that had been shorting — essentially seeking to profit from a further decline in prices — shares of GameStop, a struggling video game retailer.

The plan worked, upending the longstanding balance of power on Wall Street, as retail traders inflicted painful losses on hedge funds that were shorting the stocks. But much of those gains have been unwound this week.

“The incredible spike in volatility told you it wasn’t sustainable,” said Julian Emanuel, the chief equity and derivatives strategist at the brokerage firm BTIG. “We’re back to your regularly scheduled bull market, already in progress.”

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Jonny Richards

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