GME - Why Meme Stocks AMC GameStop and Others Are Crashing Today
A tough day for the broad market is proving to be a brutal one for a handful of the market's most watched and most speculative names. Meme stocks GameStop (NYSE: GME) and AMC Entertainment (NYSE: AMC) are down 16.5% and 17.1%, respectively, as of 11:58 a.m. ET Monday. Lower-profile names of the same ilk like entertainment company Genius Brands (NASDAQ: GNUS) and autonomic driving tech outfit MicroVision (NASDAQ: MVIS) are also lower (to the tune of 11.7% and 11.1%, respectively, in those instances). The steep sell-offs are being driven not by any alarming news from or about these companies, but by the fact that traders are collectively adopting a new mindset.
In retrospect, no one can be completely surprised.
All four aforementioned meme stocks were artificially buoyed at some point during the pandemic by coordinated efforts meant to spark short squeezes for each. And those efforts worked. The problem with this particular dynamic is that all the stock purchases made prior to these respective short squeezes can only be turned into a profit now by closing out these trades with a sale. Selling of course applies bearish pressure to a stock, sending it lower when there aren't enough buyers around to sop up the excess supply of a stock.
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Why Meme Stocks AMC, GameStop, and Others Are Crashing Today