Just as the S&P 500 index hit its 23rd historical high of the year and the Dow Jones Industrial Average approached 40000 points for the first time, many market traders found that the overnight frenzy in the US stock market lacked some of the most shining "figures" of recent times: those retail investors who had just started their second spring of speculation
Market data shows that the stock price of Game Station plummeted nearly 19% on Wednesday, marking the largest daily decline since 2021, while AMC fell 20%. These two stocks have more than doubled in value in the first two days of this week, but Wednesday's decline has erased their combined market value of about $3 billion, and this week's gains have almost halved.
In addition to these two most typical retail speculative stocks, several other well-known influencer stocks in the industry also performed poorly on Wednesday: photovoltaic company SunPower closed down about 29%, Koss closed down 19.2%, and BlackBerry closed down 6.9%.
The Waterloo like trend of these stocks clearly contrasts with the strong performance of the overnight US stock market after the release of CPI data. The S&P 500, Dow Jones, and Nasdaq Composite Index hit historic highs on the same day for the first time since March 21st on Wednesday. As of the close, the S&P 500 index rose 1.2%, while the Dow rose about 350 points, or 0.9%. The index is less than 100 points away from the 40000 point mark.
Undoubtedly, the two-day surge in the above-mentioned internet celebrity stocks came to a sudden halt on Wednesday without any signs, and even against the backdrop of the overall market surge, which inevitably reminds us of the crazy memories that enveloped the market during the "retail war against Wall Street" in early 2021.
At that time, the gaming station soared by over 1000% in just a few weeks, and then a group of the most sensitive groups quickly liquidated most of the profits. Before the frenzy among retail investors finally dissipated, the stock price of Game Station continued to fluctuate for several months, but still did not fully recover to its early high.
This scene has clearly shaken many American retail investors: is the new wave of stock speculation driven by the "leading big brother" on social media just a "two-day trip"?
Is the leader taking you on a two-day tour?
We have previously introduced that the rise of this round of internet red stocks was driven by Keith Gill, a leading retail investor named Roaring Kitty, returning to social media. Three years ago, it was Gill who actively posted on the Wallstreetbet section of the Reddit forum, encouraging a large number of American retail investors to flock to gaming station stocks, thus triggering the shocking "retail investors short selling Wall Street" incident worldwide.
On Sunday evening, an X account related to Gill posted for the first time in nearly three years: a photo of a man sitting in a seat leaning forward. At present, many people are still closely monitoring Gil's X account, which regularly releases obscure videos starting from Monday morning. These videos include movies, TV shows, and TikTok clips, but there is no specific content about stocks yet.
(The leader has only been posting some inexplicable videos in recent days)
Ben Laidler, a global market strategist at eToro, said that the conditions that drove stock prices to soar, similar to those in 2021, are actually no longer present in the current situation of these retail investors speculating in stocks.
"The situation is different this time. The lockdown period of the pandemic has ended. Most of the surplus savings of consumers have been spent. Although the short positions in these stocks are not small, they are also much lower than at that time. Interest rates are much higher," Laidler pointed out.
This is actually the same situation as what we mentioned in our report on Wednesday. Compared to three years ago, Wall Street has learned more, while in the United States, retail investors have no money, no time, and high interest rates. Marco Iachini, Senior Vice President of Vanda Research, wrote in a research report on Tuesday, "Nowadays, quantitative/hedge funds are more capable of handling these situations. If there are, we believe they will first participate in short selling with retail investors, but they will also operate in the opposite direction, and the likelihood of collective exit from these trades before retail traders is high."
From the perspective of transactions, with the general rise of the US stock market giving investors more choices, the trading volume of the above-mentioned retail investors' speculative stocks on Wednesday was significantly lower than the previous two days, showing a shrinking trend.
Of course, on the news side, the explosive stock trading by retail investors on Wednesday, especially the decline of AMC, is also related to the news that AMC announced an additional issuance while taking advantage of the soaring stock price in the previous two days.
AMC disclosed in a latest document on Wednesday that it will issue 23.3 million shares to replace notes due in 2026, with a principal amount of $164 million. Affected by this, the price increase of AMC junk bonds has expanded. The valuation of this non-public traded stock is $7.33 per share, based on the exchange of principal and accrued interest. AMC closed at $5.48 on Wednesday.