Meme-stock purchases by day traders dropped 28% last week with investors ‘falling out of love’ with those shares, new data shows

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  • Purchases of meme stocks by retail investors dropped 30% – to $360 million from $500 million – last week, according to research firm Vanda.
  • Buying in meme stocks such as GameStop and AMC has fallen from a weekly peak of more than $900 million in June.
  • Virgin Galactic bucked the trend, however, ahead of the company’s planned space flight on Sunday.
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Purchases of so-called meme stocks by retail investors dropped sharply last week, with Vanda Research saying the decline highlights that investors are “falling out of love” with that segment of the equity market after their spectacular rallies.

Meme-stock purchases slumped to $360 million, down from $500 million and marking a 28% drop, the research firm said in an update published Wednesday. The firm that stock prices have caught up with weaker demand.

“In most speculative trades, a few unsuccessful attempts to buy dips are followed by a rush to the exit,” wrote Giacomo Pierantoni, a research analyst at Vanda whose VandaTrack arm monitors activity in 9,000 individual stocks and ETFs in the US.

Overall weekly purchases of meme stocks, which include GameStop and AMC Entertainment, have fallen from a peak of $963 million that was notched on June 8.

GameStop, AMC, Bed Bath & Beyond and other companies still hold hefty price gains for 2021 that have been propelled by retail investors working to make money by forcing short squeezes on hedge funds that are seeking to profit from a drop in those share prices. But many of those stocks have come off their highs. AMC traded around $46 on Thursday, down from its peak above $72 on June 2.

But Vanda noted that one of the speculative baskets it monitors logged a significant increase in retail buying this week:

“Space. Retail investors have been eager to buy dips on Virgin Galactic, likely in anticipation of the next test flight on July 11th, when Richard Branson will be joining a crew of five astronauts,” said Pierantoni.

Virgin Galactic shares soared by as much as 17% ahead of Branson’s scheduled space plane flight on Sunday.

In a separate gauge of consumer interests, Bespoke Investment Group said results of its tracking on Google Trends of the term”meme stocks” suggests that interest has collapsed.

“That also applies to the individual ticker symbol of the stock that kicked off the meme stock mania: “GameStop,” and searches for AMC have fallen considerably, it said in a Thursday note.

Read more: Morningstar’s strategists say these 10 travel stocks are the best placed to soar from pent-up demand as COVID-19 restrictions lift – including 4 picks that look especially cheap

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GameStop plunges 27% as company says it plans to sell up to 5 million shares and discloses SEC request for information on trading activity

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  • GameStop dropped 27% on Thursday on the company’s plans to sell additional shares and as the SEC looks into trading activity of its stock.
  • The video-game retailer, whose shares are part of a meme-stocks rally, said it will cooperate with the SEC’s inquiry.
  • The company could sell up to 5 million shares.
  • See more stories on Insider’s business page.

GameStop sank by nearly 30% on Thursday after the video game retailer said it may sell millions of shares and said the Securities and Exchange Commission has requested information as part of its investigation into the trading of its shares.

The company issued the updates late Wednesday alongside first-quarter financial results that beat Wall Street’s expectations.

Shares of GameStop on Thursday plunged 27% to finish at $229.39. The stock started falling in after-hours trade Wednesday as GameStop said it may sell up to an additional 5 million shares as part of a previous agreement with its sales agent, Jefferies. Investors are concerned about dilution, or that the value of shares already outstanding will decline. The sale of the shares would take place from time to time at or near market prices under the “at-the-money” agreement.

Another source of downward pressure was GameStop’s disclosure that SEC staff in late May requested the company voluntarily provide documents and other information as part of the regulator’s investigation into the trading activity of its securities and in the securities of other companies.

GameStop’s stock price has soared by more than 1,500% so far this year as part of a surge in so-called meme stocks — including AMC Entertainment, Bed Bath & Beyond, BlackBerry — that’s been driven by retail investors working together to force a short squeeze on hedge funds aiming to profit from bets that the companies’ share prices will fall.

“We are in the process of reviewing the request and producing the requested documents and intend to cooperate fully with the SEC Staff regarding this matter. This inquiry is not expected to adversely impact us,” GameStop said as part of its quarterly financial report.

GameStop late Wednesday said sales rose to $1.28 billion, higher than the $1.16 billion expected by four analysts in a FactSet poll. Its adjusted loss was $0.45 a share, narrower than its adjusted loss of $2.44 a share a year earlier and narrower than Wall Street’s forecast of a loss of $0.83 a share.

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GameStop’s latest rally has pushed shares up roughly 50% in the past month amid a new meme-stock boom

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  • Meme stocks are experiencing a resurgence, with shares of GameStop rising roughly 50% in the past month.
  • The rise can be partially attributed to a short-squeeze as the company’s short interest remains elevated at 20%.
  • Shares of Gamestop have risen more than 1,200% since December 31, 2020.
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GameStop stock continued its rally on Friday amid a meme-stock resurgence with shares rising as much as 5.39%.

In the past month alone, shares of GameStop are up nearly 50%, while fellow Reddit darling AMC has seen an incredible rise of nearly 200% over the same period.

The jump in share price can be at least partially attributed to a short-squeeze as 20.27% of outstanding shares are currently sold short, according to data from S3 Partners managing director of predictive analytics, Ihor Dusaniwsky.

GameStop shares were also buoyed by the company’s recent announcement that it is building a non-fungible token (NFT) platform based on the ethereum blockchain.

The meme-stock resurgence has put short sellers in some serious trouble. On Tuesday alone, short sellers in AMC and GameStop lost $618 million, according to data from ORTEX.

GameStop stock is up more than 1200% since December 31, 2020, and the company has capitalized on the move.

The video game retailer raised more than $550 million via an at-the-market share offering, paid down debts, and implemented a turnaround strategy led by Chewy.com co-founder Ryan Cohen.

However, GameStop’s resurgence comes in spite of recently released data that shows videogame sales declined on a year-over-year basis for the first time in 14 months in April, according to NPD Group.

Game Stop also let its former CEO, George Sherman, walk away last month with a $170 million pay-out.

Shares of Gamestop still trade around 45% off of the company’s record-high of $483 per share, reached during the wild late-January short-squeeze.

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GameStop rally extends to 35% as Reddit traders push new meme-stock feeding frenzy

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Wall Street Bets users have driven up the price of GameStop stock

  • GameStop has surged 35% over the past two-days amid a renewed hype from Reddit traders.
  • The video-game retailer has seen a resurgence in both price and Reddit activity following a 2-month consolidation in the stock.
  • Short-sellers are likely aiding the rally as GameStop short interest remains elevated at about 21%.
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GameStop has surged as much as 35% over the past two days amid a renewed resurgence of chatter about the video game retailer on Reddit’s Wall Street Bets forum.

The stock has consolidated sideways over the past two-months, but shares have moved to the upside in recent days alongside its “meme stock” sidekick AMC Entertainment, which is up 49% since the start of the week.

The move higher in GameStop is causing short-sellers more pain, as short interest in the company has remained elevated even after hedge fund Melvin Capital capitulated out of its bet against the company. According to data from MarketBeat, 21% of GameStop’s share float is sold short, and month-to-date, GameStop short-sellers have lost $442 million, according to data from ORTEX.

GameStop has capitalized on its epic year-to-date share-price rally of more than 1,100%. The company raised more than $550 million via an at-the-market share offering, retired debt, and has implemented a turnaround strategy led by Chewy.com co-founder Ryan Cohen.

That turnaroun plan was on full display on Tuesday after the company revealed that it is building an NFT platform on the Ethereum blockchain.

“gamestop? GAME ON!!!!” said a Wall Street Bets post in reaction to the recent rise in shares of GameStop. The post had about 18,000 upvotes as of Wednesday morning.

Shares of GameStop are still about 50% below its record intra-day high of $483 reached during the wild January short-squeeze.

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GameStop shares jump 12% as the company announces CEO George Sherman will step down in 3 months or sooner

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GameStop’s shares rose 12% on Monday after the company announced its chief executive officer George Sherman will step down on July 31 or upon the appointment of a successor.

Shares were already up before the company’s announcement, buoyed by the company’s progress in making major changes led by activist investor Ryan Cohen.

GameStop said a board committee is actively looking to find a suitable replacement for Sherman’s position.

“GameStop appreciates the valuable leadership that George has provided throughout his tenure,” board chairman Ryan Cohen said in a statement. “He took many decisive steps to stabilize the business during challenging times. The company is much stronger today than when he joined. On a personal note, I also want to thank George for forming important partnerships with the new directors and executives who have joined GameStop in recent months.”

Sherman had been with the video-game retailer for less than two years. The company’s management shake-up is part of its wide “transformation” in culture and strategy being overseen by Cohen.

Gamestop was at the heart of a battle-play of “Wall Street versus The Little Guy” in a Reddit-fueled trading frenzy this year. It was hit with a stock downgrade last week by an analyst from Ascendiant Capital, who said its online popularity will have less of a long-term impact on the stock.

Shares ended at $154.49 per share at Friday’s close, but were trading as high as $173.08 on Monday.

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GameStop shares jump 6% as the company announces CEO George Sherman will step down in 3 months or sooner

Gamestop

GameStop’s shares rose 6% on Monday as the company announced its chief executive officer George Sherman will step down on July 31 or upon the appointment of a successor.

Shares were already up before the company’s announcement, buoyed by the company’s progress in making major changes led by activist investor Ryan Cohen.

GameStop said a board committee is actively looking to find a suitable replacement for Sherman’s position.

“GameStop appreciates the valuable leadership that George has provided throughout his tenure,” board chairman Ryan Cohen said in a statement. “He took many decisive steps to stabilize the business during challenging times. The company is much stronger today than when he joined. On a personal note, I also want to thank George for forming important partnerships with the new directors and executives who have joined GameStop in recent months.”

Sherman had been with the video-game retailer for less than two years. The company’s management shake-up is part of its wide “transformation” in culture and strategy being overseen by Cohen.

Gamestop was at the heart of a battle-play of “Wall Street versus The Little Guy” in a Reddit-fueled trading frenzy this year. It was hit with a stock downgrade last week by an analyst from Ascendiant Capital, who said its online popularity will have less of a long-term impact on the stock.

Shares ended at $154.49 per share at Friday’s close, but were trading as high as $164.96 in Monday’s pre-market session.

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GameStop’s Reddit-fuelled trading surge could plunge 94% as it faces growing competition from rival digital games, one Wall Street analyst says

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  • GameStop’s shares could tumble 94% on strong competition from rival digital games, one analyst said.
  • The Reddit favorite’s meme popularity will likely have less of a long-term impact on its stock, he said.
  • Edward Woo downgraded GameStop’s rating to “sell” from “hold” and lowered his 12-month price target.
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GameStop, the video-game retailer cheered by day traders this year, is likely to see its Reddit rally fade because of strong digital competition from Microsoft and Sony, Ascendiant Capital analyst Edward Woo wrote in a research note on Saturday.

Woo has raised questions about GameStop’s low market share in digital game sales and expects the company’s long-term share price to drop sharply.

He further said GameStop’s popularity on Reddit will at some point stop driving the movement in its stock.

“Due to the popularity of GameStop on Reddit chat boards and with Robinhood retail investors, GameStop shares appears to no longer trade on traditional fundamental valuations or metrics, but on retail investors’ sentiment, hope, momentum, and the powers of crowds,” he wrote.

“This makes short term price movement forecasts nearly impossible (and we acknowledge can drive shares much higher), but we believe that over the long run GameStop’s current elevated share prices will come back down to match its current weak results and outlook.”

Woo downgraded the company’s stock to “sell” from “hold,” and lowered his 12-month price target to $10 per share from $12.

GameStop didn’t immediately respond to Insider’s request for comment.

The company’s stock was up almost 4,000% from a year ago after it found itself at the center of a stock market storm between Reddit day traders and short-sellers.

Its shares were last trading 10% lower in the pre-market, at $141.09 per share on Tuesday, after GameStop was said to be looking for a new CEO to replace George Sherman, sources told Reuters.

News of the management shake-up followed Woo’s stock downgrade. The company is already going through wide “transformation” in culture and strategy under board member and activist investor Ryan Cohen.

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Why one Wall Street analyst doubts GameStop’s e-commerce turnaround plan, even with Ryan Cohen set to become chairman

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  • GameStop’s plan to elect activist investor Ryan Cohen to become its chairman isn’t winning over Wall Street analysts.
  • CFRA Research reiterated its “sell” rating on GameStop and said plans to make Cohen chairman don’t change the fundamental story of the video game retailer.
  • Here’s why CFRA is still bearish on GameStop despite its e-commerce turnaround plan.
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GameStop is moving ahead with its turnaround plan to shift its selling strategy to e-commerce from physical stores, and its recently announced plans to elect activist investor Ryan Cohen as board chairman is part of that.

But one Wall Street analyst remains unconvinced that shares of GameStop present a good value for investors at current prices, and that GameStop can even pull off its turnaround plan.

CFRA Research analyst Camilla Yanushevsky reiterated her Sell rating on GameStop, arguing that the stock’s fair value is $16 rather than its current price of $177. That $16 price target represents 91% downside potential from its current price.

Yanushevsky was not surprised by GameStop’s decision to elect Cohen and said “little has changed in the fundamental story.”

The fundamental story, according to Yanushevsky, is the fact that GameStop was the only member of its peer group to post negative sales growth in its fiscal year 2020 despite the backdrop of thousands of dollars in stimulus checks and a surge in video game activity amid the pandemic. GameStop’s comparable store sales fell 9.5% to $5.1 billion last year.

“We hold concerns over [GameStop’s] ability to maintain competitive positioning due to [its] high dependence on brick-and-mortar and consumers’ shift away from physical to digital,” Yanushevsky said.

Further adding to Yanushevsky’s concerns on GameStop is the fact that it was the only member of its peer group to not provide earnings guidance for the upcoming year.

Investors seemed to also not view Cohen becoming chairman of GameStop’s board as a surprise. Shares initially rose 4% on the news, but eventually traded about flat in Thursday trades.

Read more: Goldman Sachs handpicks 40 stocks that will enjoy bigger earnings growth than Wall Street expects in 2021

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GameStop pares early gains after saying it plans to elect Reddit favorite Ryan Cohen as chairman

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GameStop shares rose on Thursday after the company announced it intends to elect activist investor Ryan Cohen as chairman, but quickly pared their gains.

The video-game retailer also nominated five other people for the board – including private equity executive Larry Cheng and Kraft Heinz senior vice president Yang Xu – as it tries to reinvent itself as an e-commerce force.

GameStop’s board also appointed one of those nominees, Jim Grube, to serve on the strategic planning committee. Grube was chief financial officer at Chewy, the online pet supply retailer founded by Cohen.

Voting on the board nominees will take place at the company’s annual meeting of stockholders on June 9, the company said in a statement before markets opened.

Cohen has become an increasingly powerful figure at GameStop in recent months. The billionaire’s RC Ventures first invested in GameStop in September 2020, and is one of the biggest shareholders.

GameStop stock opened around 4% higher but quickly fell back. It stood 0.44% lower at $177.38 at 10.10 a.m. ET.

Cohen was first appointed to the board in January, which analysts have cited as one of the catalysts for the dramatic rise in the stock which captured the markets’ attention at the start of the year.

He has since seized control of the company’s strategy, hiring numerous executives with backgrounds in online retailing in an effort to turn the flagging company around.

On Monday, GameStop said it plans to sell as many as 3.5 million shares to raise up to $1 billion to help fund Cohen’s transformation plans.

Separately on Monday, GameStop said preliminary global sales during the first nine weeks of fiscal 2021 increased by about 11% from the period a year earlier.

Read more: Goldman Sachs handpicks 40 stocks that will enjoy bigger earnings growth than Wall Street expects in 2021

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GameStop climbs as Ryan Cohen-led revamp continues with hire of Amazon exec as chief growth officer

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  • Shares of GameStop rose 5% on Tuesday after the company announced the appointment of Elliott Wilke as chief growth officer.
  • Wilke will join the company on April 5 after a seven-year stint with Amazon.
  • GameStop also named Andrea Wolfe as vice president of brand development and Tom Petersen as vice president of merchandising.
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Shares of GameStop rose 5% on Tuesday after the video game retailer announced the appointment of Elliott Wilke as chief growth officer, boosting the company’s to pivot to e-commerce driven by board member and former Chewy CEO Ryan Cohen.

Wilke will join the company on April 5 after a seven-year stint with Amazon where he held senior roles in Amazon Fresh, Prime Pantry, and Worldwide Private Brands. At GameStop, he will oversee growth strategies and marketing, with a focus on increasing customer loyalty.

GameStop also named Andrea Wolfe, former Chewy vice president of marketing, as vice president of brand development, and Tom Petersen, former Chewy vice president of merchandising, as vice president of merchandising. Both executives started on March 29.

Cohen has been vocal about turning the video game retailer that was at the center of the Reddit-trader phenomenon into an e-commerce powerhouse.

GameStop, “needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences,” Cohen wrote in the letter, “not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem.”

The Grapevine, Texas-based company earlier in March also named Jenna Owens, a former Amazon executive, as chief operating officer. Owens also used to work at Google.

GameStop’s appointment of Wilke and other industry veterans marks yet another recruitment by the once-struggling video game retailer ever since the mania in January. The company-which sells video game hardware, video game accessories, electronics products, among others-found itself suffering as more people download games, significantly reducing customer footprint in physical stores.

Despite the massive hype, the video game retailer’s fourth-quarter earnings last week missed Wall Street’s estimates in the first financial report since the Reddit-driven rally.

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