A screen displays the logo and trade information for GameStop on the New York Stock Exchange (NYSE) site on March 29, 2022.
Brendan McDermott | Reuters
Shares of the two meme stocks rose on Thursday, adding to an unexpected contraction for the stock market, which had fallen in active trading for more than a month.
GameStop and AMC turned upside down early last year, when a group of retail investors consolidated trading in online chat rooms, creating massive short-term pressures on these stocks that are widely hated by hedge funds and other players. Meteor rallies have caused great anguish to many hedge funds and other short sellers involved in these speculative names.
Since then, stocks have retreated from their peak prices, and short-sellers have begun to create levels again. According to FactSet, AMC has a short-term interest rate of 19.5%, while GameStop stands at 21.4%.
Major challenges against the company can sometimes lead to dramatic one-day moves in a stock, with hedge funds moving to close their short-term positions when the stock rises, thus creating more buying pressure. This process is called short contraction.
Despite the big moves on Thursday, stocks have been below their highs since the first half of 2021. Gamestop, which peaked at $ 483 a share last January, traded at $ 90 to $ 100 a share last January.
AMC, which touched $ 72.62 last June, was trading around $ 12 a share on Thursday.
It is easy to force new short-term pressures, even for a few business outlets or even a large financial institution, as the market limits of companies have plummeted.
In 2021, both AMC And Stop the game Utilizing the price of temporarily raised shares to sell additional shares and raise capital. AMC CEO Adam Aaron welcomed retail investors to the rally and answered questions about the returns of small dollar traders and offerings from shareholders.
AMC has used the money raised to buy other theaters across the country. However, the company bought a stake Small Gold Mining Company Earlier this year it had a shaky financial history.
– Yun Li of CNBC contributed to this report
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