GameStop shares topped record close in the morning, suddenly shaved off nearly one-third of their value while being repeatedly halted after noon, then recovered a good bit of what was lost; other meme stocks followed a similar pattern
If you thought the meme-stock roller coaster had reached its craziest twists and turns, you were proved wrong Wednesday.
GameStop Corp. shares were on track for their highest closing price in history and their longest winning streak since the videogame retailer's stock became the poster child for Reddit-inspired investment frenzies, but they suddenly plunged and lost more than a third of their value while being halted repeatedly, then reversed and headed higher again. Other meme stocks followed a similar pattern -- gains in the morning, sudden plunges just after noon Eastern time, and an afternoon recovery.
GameStop $(GME)$ shares ended with a 7.3% gain at $265, after trading in a range from $172 to $348.50 on the day. The gain completes a six-session winning streak for the stock, its longest since Sept. 3, 2020, when the stock finished higher eight days in a row, according to Dow Jones Market Data Group.
That was well before GameStop's stock became a household name in January, when buy-and-hold investors on Reddit’s WallStreetBets forum rallied against Wall Street firms betting heavily against the stock, making it one of the most shorted stocks out there. Recently, one analyst charted a strong correlation between the volume of chatter on WallStreetBets and GameStop’s share price.
Prices plunged just after midday for the meme stocks, with GameStop losing more than $100 a share in a matter of minutes as trading was halted seven times between 12:20 and 1:15 p.m. But the price turned around toward the end of that streak of halts, and ended with the third-highest closing price in GameStop's history.
AMC Entertainment Holdings Inc. $(AMC)$, Koss Corp. $(KOSS)$, BlackBerry Ltd. (BB.T) and Nokia Corp. (NOKIA.HE) shares also saw gains in the morning session suddenly disappear after noon, then headed higher after the plunge, at different scales. AMC, for example, gained nearly 19% in morning trading, plunged to a daily decline of nearly 10% between noon and 1 p.m. Eastern, then bounced back to around even before closing with a 6.4% decline ahead of the scheduled release of the theater chain's quarterly financial results after the bell .
GameStop trading volume surpassed 70 million shares, compared with a 10-day average daily volume of 59.5 million and a 52-week average daily volume of 14.9 million. The company had been commanding its highest market cap since January after Tuesday's trading .
Prior to that, GameStop logged its second-best week ever with a 150% gain, compared with its 400% weekly rally back in late January . The four best weekly gains for the stock occurred between a six-week period in 2021 as investors targeted the stock en masse.
Results for GameStop's fourth quarter, which includes holiday sales, are scheduled for March 23 after markets close. Back in January, the company gave a sneak peek showing that e-commerce sales surged more than 300% but overall sales declined in the holiday season.
GameStop shares are up more than 1,700% this year alone, and up more than 8,000% over the past 12 months. By comparison, the S&P 500 index has increased 4% in 2021 and is up 35% over the past 12 months.