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GameStop stock was reaching new heights, but shares in the meme stocks just plummeted

By Wallace Witkowski

Shares topped record close and were heading for longest winning streak of the year, but suddenly shaved off nearly one-third of their value while being repeatedly halted after noon; AMC and other Reddit faves are following similar patterns

GameStop Corp. shares Wednesday were on track for their highest closing price in history and their longest winning streak since the videogame retailer's stock became the poster child for Reddit-inspired investment frenzies, but a sudden plunge in the share price and a trading halt clouded the picture around midday.

GameStop (GME) shares traded 5% to 36% above Tuesday's close in Wednesday's morning session, including topping the stock's Jan. 27 record close of $347.51. They were on track for a six day winning streak, the longest since Sept. 3, 2020, when the stock finished higher eight days in a row, according to Dow Jones Market Data Group.

That was well before GameStop's stock became a household word starting in January (link), when buy-and-hold investors on Reddit's WallStreetBets forum rallied against Wall Street firms betting heavily against the stock, making it one of the most shorted stocks out there. Recently, one analyst charted a strong correlation between the volume of chatter on WallStreetBets and GameStop's share price (link).

Prices plunged just after midday, however, losing roughly $100 a share in a matter of minutes and falling lower than Tuesday's closing price of $246.90. Trading was halted three times between 12:20 and 12:40 p.m. Eastern time as prices plunged. Other stocks that were wrapped up in the Reddit frenzy showed similar patterns Wednesday: AMC Entertainment Holdings Inc. (AMC), Koss Corp. (KOSS)and Nokia Corp. (NOKIA.HE) also saw huge gains in the morning session suddenly disappear after noon.

By midday, GameStop trading volume had surpassed 32 million shares, compared with a 10-day average daily volume of 59.5 million and a 52-week average daily volume of 14.9 million. The company had been commanding its highest market cap since January and currently holding at at valuation of more than $23 billion. Last week, GameStop settled just shy of a $10 billion cap, following a weekly gain of 35% (link).

Prior to that, GameStop logged its second best week ever with a 150% gain, compared with its 400% weekly rally back in late January (link). The four best weekly gains for the stock occurred between a six-week period in 2021 as investors targeted the stock en masse.

Results for GameStop's fourth quarter, which includes holiday sales, are scheduled for March 23 after markets close. Back in January, the company gave a sneak peek showing that e-commerce sales surged more than 300% (link) but overall sales declined in the holiday season.

GameStop shares are up more than 1,700% this year alone, and up more than 8,000% over the past 12 months. By comparison, the S&P 500 index has increased 4% in 2021 and is up 35% over the past 12 months.

-Wallace Witkowski; 415-439-6400;


(END) Dow Jones Newswires

03-10-21 1243ET

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