Nov 28, 2022 Last Updated 19:44 PM EST

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GameStop, AMC Drama Over: Are the Reddit Investors Losing?

Feb 02, 2021 10:38 AM EST

GameStop
(Photo : Michael M. Santiago / Staff/GETTY IMAGES)

Is the glee of Reddit investors truly shortlived? For now, it appears so. It is a new month, after all. 

According to Bloomberg, the stocks that have became quite popular among the Reddit investors - those that have values that increased exponentially overnight, are now crashing. 

GameStop Corp. declined by a huge 34% in U.S. pre-market trading. It already took a plunge of 31% plunge on Monday.

On the other hand, AMC Entertainment Holdings Inc. plummeted 25%. Following these two is Express Inc., which lost a total 18% and expected to tank further, as reported by Yahoo Finance. 

Silver, allegedly the next GameStop, has tumbled for over 5% after surging to an eight-year high.

The trend is quite expected, since their rise were out of character in the first place and allegedly only the result of some "stunt" pulled by Reddit's so-called amateur investors willing to do something phenomenal to take down the Wall Street giants. 

Majority of the rise were because of speculative activity, which meant a bubble was likely to burst some time. Still, there is no denying that was has transpired was something big and cannot be discounted. 

GameStop's Rise Stopped 

The speculative activity created online has certainly gained the attention of global markets, even capturing the usually nonchalant U.S. politicians and shocking brokerages around the world.

READ MORE: Musk, Bezos, Buffet, Dorsey: Billionaires Who Make Millions Every 24 Hours

The speculative tide is now turning, as some financial experts predicted it will be. 

"The short squeeze momentum met its inevitable end," said Mark Taylor, a sales trader at Mirabaud Securities. "It seems reasonably clear that as the cheerleading and rage against the machine dies down, the man on the street is left holding the bag again."

For GameStop, short interest plunged to 53% of the available shares, from more than 140% just last month, based on the data provided by the financial analytics firm S3 Partners.

Trading volume on Monday massively slowed down to one-third of the average of the past five sessions that have taken place the last few weeks. 

It remains to be seen whether the sudden drops would really have an impact though, except for some "I told you so's."

GameStop, AMC Crashing, Will this Affect the Market? 

According to analysts, the broader market seems still relatively immune to the intense volatility in GameStop, AMC and silver. The meteoric rises of the stocks were applauded on by some, and booed by others, but many knew reverses in trends were highly possible.

Global equities rallied sharply into the U.S.  on the morning of February 2. The focus is presently on big tech earnings. S&P 500 futures increased by 1% as of 5 a.m. in New York. 

Maybe it is also Robinhood's decision to stop intervening on the unfolding drama.

The trading app, after its CEO butted heads with Tesla's CEO Elon Musk,  eased the trading restrictions it imposed the last time. 
On Monday afternoon, Robinhood let users to purchase up to 20 GameStop shares. Before this, users can only buy one, because the market was in a wild frenzy. It's action made it more frenzied. 

READ MORE: CEO vs. CEO: Elon Musk Grills Robinhood Over GameStop Intervention

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