GameStop, AMC tumble more than 20% as meme stock rally fizzles after just two days

GameStop and AMC shares fell Wednesday as the meme stock trading frenzy showed signs of fizzling.

The brick-and-mortar video game retailer declined 29%, while the movie theater chain dropped 22%. Before Wednesday, GameStop and AMC were up 179% and 135% this week, respectively.

AMC Entertainment

The sell-off in AMC shares came after the company announced a debt-for-equity swap. AMC will issue 23.3 million shares in a debt-for-equity exchange for $163.9 million of bonds that mature in 2026. The company also completed a $250 million stock sale on Monday.

The two meme stars both experienced jaw-dropping rallies and an explosion in trading volumes at the start of the week, but this time retail interest seems to be much smaller and short-lived. In terms of net retail trader inflows, it pales in comparison with the epic mania three years ago.

For example, GameStop and AMC saw more than $15.8 million and $37.5 million, respectively, in net retail trader inflows Monday, data from Vanda Research shows. But that is dwarfed by peak daily inflows of about $87.5 million for GameStop and $170 million for AMC seen in late January 2021.

GameStop

The speculative run was reignited Monday by a rare social media update from "Roaring Kitty." The man, whose legal name is Keith Gill, posted a picture on the X social media platform of a video gamer sitting forward on their chair — a meme used by gamers to indicate they are taking the game seriously.

Gill, also known as DeepF------Value on Reddit, is a former marketer for Massachusetts Mutual Life Insurance, who previously led a host of day traders piling into GameStop back in 2021.

The return of the meme stock phenomenon brought GameStop and AMC shares up more than 70% on Monday, with the stock extending gains into Tuesday. Enthusiasm appeared to be fading by the close of the previous session.

Smead Capital Management CEO Cole Smead described the meme stock craze as "frankly stupid," saying it's "gambling" on CNBC's "Street Signs Europe."

— CNBC's Alex Harring contributed reporting.