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AMC, GameStop and other Reddit memestock favourites slide as rally loses steam

AMC Entertainment Holdings Inc (NYSE:AMC) alongside other ‘memestocks’ favoured by retail traders on the Reddit forum r/wallstreetbets were on the back foot in Friday’s session as a recent rally showed signs of losing momentum.

In mid-morning trading in New York, the cinema chain was down 0.9% at US$50.89, while fellow Reddit darling GameStop Corp (NYSE:GME) dropped 2% to US$253.60.

READ: AMC warns Reddit investors be prepared to lose money

Meanwhile, BlackBerry Ltd (NYSE:BB), another memestock favourite, sank 7.7% to US$15.01, followed by headphone maker Koss Corp (NASDAQ:KOSS) which dropped 3.9% to US$29.63.

The loss of momentum marks a slightly negative end to what has been a rapid rise for AMC over the past week.

Since the start of trading on Tuesday, and despite Friday’s losses, the shares have risen by 98% as retail investors returned to the stock. In mid-afternoon trading on Thursday, the shares reached a price of US$67.46, their highest level ever.

The turnaround in fortunes is all the starker considering AMC narrowly avoided bankruptcy earlier this year as the pandemic forced the closure of cinemas, with the CEO of the chain now offering free popcorn to investors who sign up for company updates.

The decline of the memestocks may also bring a brief respite to short-sellers, which has been left battered and bruised by retail trader efforts to inflict massive losses on their positions by sending shares in heavily shorted firms skyrocketing.

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