GameStop (GME) stock fell nearly 35% on Wednesday as the recent rally among meme names faded. Shares of the video game retailer have emerged from a two-day short squeeze. GameStop stock has risen more than 180% in the past two sessions.
AMC (AMC) also fell more than 25% on Wednesday after shares of the theater chain operator rose 95% over the past two days.
Other heavily shorted stocks that fell on Wednesday included SunPower (SPWR), Beyond Meat (BYND), and Children’s Place (PLCE).
GameStop shares rose Monday following the re-emergence of Keith Gill, also known as “Roaring Kitty,” whose bullish case on GameStop ignited the meme’s stock rally again in 2021.
In a note to clients, Nicholas Colas, co-founder of DataTrek Research, wrote that this latest trading action “seems like an echo of early 2021, when this calculation helped fuel a ferocious short squeeze in GameStop.”
Colas noted that the comeback in 2021 was a little bigger than what we’ve seen so far this time around, with GameStop stock rising 1,500% in January 2021 before losing most of those gains.
The pain short sellers took during the original meme stock rally three years ago hasn’t stopped bets against these companies in recent days.
Data from S3 Partners showed that short interest in GameStop has remained high since the meme’s rise, with nearly 24% of the float.
GameStop shorts fell $1.36 billion on Tuesday after losing nearly $900 million on Monday.
“We are seeing continued short covering due to pressure from the birth of meme trading.” Ihor Dusaniwski saidManaging Director of S3 Partners.
Wall Street strategists warned on Tuesday that the new wave of enthusiasm is a far cry from the craziness of three years ago, with “low” chances of a repeat in 2021.
The meme craze three years ago gained national attention, attracting an army of retailers during pandemic lockdowns.
“I don’t look at this at all as much as I did in 2021 when it was almost a transformative moment, pulling, you know, tens of millions of people into the market,” said Tom Sosnoff, CEO of Tastylive, an options and solutions company. Futures trading platform.
On Tuesday, YouTuber Matt Kohrs, who has held positions in GameStop and AMC in the past, said the pivotal aspect of “little guy versus big guy” during the short eras of 2021 rings true today.
“The perception is that the entire system is set up and isolated to benefit the powerful elite. GME is a symbol of the populist movement against this concept,” Kohrs said.
He added: “The only real change I see from a psychological point of view is not turning inward anymore.”
Ince Ferry is Yahoo Finance’s chief business correspondent. Follow her on Twitter at @ines_ferre.
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