GameStop stock (GME) plunged 30% on Wednesday as recent gains among meme names faded. The video game retailer's stock is emerging from a two-day short squeeze. GameStop stock has risen more than 180% in the past two sessions.
AMC (AMC) also fell as much as 27% on Wednesday after the theater chain operator's stock rose 95% over the past two days.
Stocks that were heavily shorted on Wednesday included SunPower (SPWR), Beyond Meat (BYND), and Children's Place (PLCE).
GameStop shares soared on Monday following the re-emergence of Keith Gill, also known as “Roaring Kitty.” Keith Gill's bullish case against GameStop ignited a rally in meme stocks in 2021.
DataTrek Research co-founder Nicholas Colas said in a note to clients that this recent trading activity “feels like an echo of early 2021, when this account fueled GameStop's vicious short squeeze.” I wrote.
Collas noted that the movement dating back to 2021 is much larger than anything seen so far this time around, with GameStop shares rising 1,500% in January 2021, but losing most of that gain since then.
The pain endured by short sellers during the first meme stock rally three years ago hasn't deterred them from betting on these companies in recent days.
Since that meme rally, short interest in GameStop remains elevated, at nearly 24% of the float, according to data from S3 Partners.
GameStop shorts fell by $1.36 billion on Tuesday after losing almost $900 million on Monday.
“With the resurgence of meme trading, we are seeing continued squeeze-related short covering.” Ihor Dusanivsky saidManaging Director of S3 Partners.
Wall Street strategists on Tuesday warned that the new outburst is a far cry from the frenzy of three years ago and that the same is “unlikely” to happen in 2021.
The meme craze three years ago gained national attention and attracted many retailers during the pandemic lockdown.
“I don't see this situation at all like 2021, which has been an almost transformative moment that has dragged tens of millions of people into the market,” said CEO of Options & Tasting Live. , said Tom Sosnoff. Futures trading platform.
On Tuesday, YouTuber Matt Koes, who has held positions at GameStop and AMC in the past, said the all-important “little guy versus big guy” aspect of the 2021 short squeeze still applies today.
“There is a perception that the entire system is set up and segregated to benefit powerful elites. GME is a symbol of a populist movement that opposes that notion,” Coase said.
“The only real change from a psychology perspective is that I'm no longer so internalized,” he added.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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