GameStop, AMC back in meme mode
GameStop and AMC have surged more than 12% and 14%, respectively, during Wednesday's trading session
Shares of GameStop and AMC Entertainment Holdings are back in "meme mode" Wednesday as retail investors are rallying around them on Reddit's speculative investing discussion forum WallStreetBets and on Twitter.
Traders on WallStreetBets ushered in a short squeeze against market short sellers earlier this year that caused the video game retailer and movie chain's stock to soar to unprecedented levels. Now, the new chatter on Reddit and Twitter suggests retail investors may be preparing for another short squeeze.
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According to financial data service Ortex, GameStop and AMC's short sellers lost about $618 million in Tuesday's trading session, which was later updated to $754 million including the two stocks' gains during after-market trading.
GameStop and AMC have surged more than 12% and 14%, respectively, during Wednesday's trading session.
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Following the initial short squeeze earlier this year, GameStop has launched an e-commerce transformation led by Chewy.com co-founder Ryan Cohen. Cohen, who has cleaned house since joining GameStop's board in January, is expected to become board chairman following the company's annual meeting in June.
In its latest effort to enter the e-commerce space, GameStop launched a new website dedicated to non-fungible tokens, or NFTs. An NFT is a unique digital token that can turn any item in the digital world, from tweets to Gifs to videos, into a collectible asset. Like Bitcoin and other cryptocurrencies, NFTs are sold and bought via the blockchain. Non-fungible tokens verify authenticity and ownership by encrypting the creator's signature on the blockchain.
The NFT platform includes a message from GameStop looking to recruit "exceptional engineers (solidity, react, python), designers, gamers, marketers, and community leaders" to help with the endeavor.
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Meanwhile, the movie theater chain has been struggling with pandemic-forced closures as well as increased interest in streaming. In addition, AMC's largest shareholder, the Dalian Wanda Group Co., dumped nearly its entire stake on Monday, kickstarting an effort by the company's CEO Adam Aron to begin engaging publicly with shareholders on social media.
However, retail investors have continued to carry the stock this week following positive comments from Aron earlier this month on the company's future.
"We finally can now say that we are looking at an increasingly favorable environment for moviegoing and for AMC as a company over the coming few months," Aron said in a prepared statement following the company's first quarter earnings release, citing increased COVID-19 vaccinations and new movie releases.
As of March 31, AMC is operating nearly all of its domestic theaters and 27% of its international theaters, both at limited seating capacity.
As of 9 a.m., short interest in GameStop has surpassed 21% of free float, according to Ortex. Meanwhile, short interest in AMC is up at least 17% of free float.