GameStop Corp. and AMC Entertainment Holdings Inc. — the poster children of 2021’s frenzy — saw shares surge at the start of the week only to fizzle, with the bulk of those gains erased just days later. Other speculative corners of the market, mainly beaten-down stocks that have drawn the scrutiny of short-selling hedge funds, saw their booms mostly go bust while the broader US stock market powered to record highs.
For AMC, the beleaguered movie chain was able to raise more than $250 million through share sales and a debt-for-equity swap though it still faces more than $4 billion in debt, according to Bloomberg Intelligence. This week’s gains look like a blip given it’s still down some 90% over the past 12 months.
Options markets also whipsawed traders, with short-term GameStop and AMC prices implying well over 500% annualized volatility at one point, before dropping to about half that by week’s end. Even as shares retreated below $40, some traders were buying GameStop calls that would only pay out if the stock rocketed back up above $128 by Friday.
The exuberance for the top meme stocks lifted shares of other companies that are also popular with the retail crowd and often trade more on sentiment than fundamentals. This group — which includes Tupperware Brands Corp., Virgin Galactic Holdings Inc. and Lucid Group Inc. — has high short interest as a percentage of float, meaning that contrarian traders have borrowed most available shares to bet against them.
Source: News Formal (newsformal.com)
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