The meme stock mania is now a movie. Here’s what has happened to GameStop and AMC

As
shares
of


GameStop
start
to
climb
in
late
2020
and
the
early
days
2021,
in
the
midst
of
the
pandemic,
characters
in
the
new
movie
“Dumb
Money”
encourage
their
friends
to
sell.

There’s
Pete
Davidson,
playing
the
brother
of
Paul
Dano’s
Keith
Gill,
aka
Roaring
Kitty,
telling
the
burgeoning
YouTube
star
to
cash
out
and
buy
a
Ferrari.
There’s
Anthony
Ramos’
Marcus,
a
GameStop
cashier,
being
lectured
by
his
parents
that
this
stock
trading
thing
isn’t
real.
And
there’s
America
Ferrera’s
Jenny,
a
nurse
and
single
mom,
whose
coworker
tells
her
that
taking
financial
advice
from
a
guy
in
a
headband
is
not
the
best
use
of
her
time
or
money.

But
those
characters
and
the
others
in
the
film,
which
hits
theaters
this
weekend,
don’t
just
ignore
that
advice.
They
double
down,
buying
more
shares
and
options,
and
start
to
incessantly
check
their
phones
and
TV
news
to
see
how
high
the
stock
is
climbing.

“Diamond
hands
…
we’re
going
to
hold
the
line,”
Jenny
says.

The
very
peak
of
the
meme
stock
mania,
which
saw
retail
traders
encourage
one
another
on
social
media
sites
like
Reddit’s
WallStreetBets
to
buy
and
hold
heavily
shorted
stocks,
came
on
Jan.
27,
2021.

That’s
the
day
GameStop
hit
its
all-time
closing
high
of
$86.88
per
share,
and
saw
more
than
373
million
shares
change
hands.
One
year
earlier,
in
2020,
GameStop
traded
about
8.5
million
shares
on
the
same
day.

That
was
also
the
highest
volume
day
on
record
for
theater
chain


AMC
Entertainment,
topping
142
million
—
up
from
less
than
400,000
on
the
same
day
a
year
earlier.
Shares
of
AMC
would
hit
their
own
record
high
in
June.

The
excitement
has
since
ebbed,
even
if
it
hasn’t
gone
away
completely,
and
traders
who
bought
shares
on
that
day
would
now
be
deeply
in
the
red.
On
Thursday,
GameStop
closed
more
than
78%
below
its
all-time
high.
AMC
was
down
more
than
97%
from
its
peak.

Many
social
media
traders
discussed
the
meme
stock
moment
in
David
vs
Goliath
terms
—
the
retail
traders
versus
the
hedge
funds.

And
the
retail
traders
won
at
least
some
of
the
battles.
The
massive
spikes
in
the
stocks
were
caused
in
part
by
“short
squeezes,”
which
occur
when
a
rising
stock
forces
those
investors
who
bet
against
the
company
to
cover
their
position
by
buying
back
shares
to
limit
their
losses,
creating
a
feedback
loop
that
pushes
the
stock
even
higher.

The
losses
caused
Gabe
Plotkin,
a
short-seller
played
by
Seth
Rogen
who
bet
against
GameStop
with
his
hedge
fund
Melvin
Capital,
to

completely
shut
down
his
fund.

There
were
also
accusations
of
fraud.

The
high
level
of
short
interest,
and
appearances
by
several
meme
stocks
on
the
SEC’s
“fail
to
deliver”
lists,
fueled
theories
from
retail
traders
that
there
was
“naked”
or
synthetic
short
trading
going
on.
An

SEC
staff
report
on
GameStop
found
no
evidence
of naked
short
selling,
however.

Another
center
of
the
controversy
was
the
brokerage
firms
themselves,
particularly


Robinhood.

Several
brokerages

limited
trading
in
meme
stocks
at
the
height
of
the
meme
stock
mania.
The
massive
moves
in
the
stocks,
combined
with
heavy
options
trading
activity,
appeared
to
overwhelm
the
ability
of
companies
like
Robinhood
to
manage
risk.

Robinhood
itself
went
public
in
July
2021.
The
stock
is
down
more
than
70%
from
its
IPO
price.

As
for
the
meme
stock
companies
themselves,
it
is
still
unclear
whether
the
fundamental
theories
of
some
Reddit
traders
were
correct.

The
GameStop
turnaround
efforts
of


Chewy
co-founder
Ryan
Cohen,
who
became
something
of
a
hero
to
the
retail
traders,
have
shown
little
sign
of
working.
Former
Amazon
executive
Matthew
Furlong
was

ousted
as
GameStop
CEO
in
June
after
about
two
years
on
the
job,
just
one
move
in
a
series
of
executive
shakeups
at
the
company.

The
financial
results
have
also
been
underwhelming.
The
company
generated
just
under
$1.2
billion
in
net
sales
in
the
second
quarter
of
2023,
its
most
recent
report.
In
the
second
quarter
of
2019,
before
the
meme
stock
mania
began,
the
company
generated
about
$1.3
billion
in
net
sales.

Meanwhile,
AMC
CEO
Adam
Aron
has
leaned
into
the
meme
stock
status
for
the
theater
chain,
offering
rewards
like
popcorn
for
shareholders.

The
company
has
also
used
its
popularity
to
raise
additional
cash
by
selling
more
shares.
AMC
announced
on
Wednesday
that
it
had
raised
more
than
$300
million
in
an
equity
raise
made
possible
by
a
corporate
finance
maneuver
involving
preferred
stock
it
called
APE
shares
—
a
cheeky
reference
to
one
of
the
references
Redditors
adopted
for
themselves.

The
new
cash
has
certainly
been
a
big
support
for
AMC
with
the
box
office
still
struggling
to
reach
pre-pandemic
levels,
but
the
theater
chain
also
made
the
curious
move
to
buy

a
stake
in
a
gold
mine.

The
AMC
stock
sales
have
diluted
the
holdings
of
individual
shareholders,
and
the
market
cap
of
AMC
is
still
down
more
than
50%
from
its
peak.

For
the
Wall
Street
titans
who
became
the
enemies
of
Reddit
traders,
the
results
have
been
mixed.
Several
short-sellers
have
said
they
pulled
back
from
that
business
after
the
meme
stock
squeezes,
though
other
trading
firms
likely
made
profits
in
the
highly
volatile
markets.

And
even
after
his
fund
sustained
heavy
losses,
Plotkin
still
had
a
enough
money
to
buy
a

controlling
interest
in
the
Charlotte
Hornets
NBA
Franchise.

At
the
end
of
“Dumb
Money,”
the
movie
shows
the
gain
in
net
worth
of
many
of
the
retail
traders
who
sold
their
shares,
presumably
near
the
top.
Several
of
the
characters
made
more
than
$100,000
on
their
trades.

But
Jenny,
the
nurse
character
whose
Reddit
name
was
“StonkMom,”
was
still
holding
on
to
the
stock
—
her
net
worth
having
dropped
back
below
zero.