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The Wall Street Publication > Blog > Markets > GameStop, Meme Stocks Hit by Market Turmoil
Markets

GameStop, Meme Stocks Hit by Market Turmoil

Editorial Board Published January 24, 2022
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GameStop, Meme Stocks Hit by Market Turmoil
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AMC finished 2021 with gains of more than 1,100%.

Photo: Damon Casarez for The Wall Street Journal

By

Sebastian Pellejero

Updated Jan. 24, 2022 4:25 pm ET

Shares of GameStop Corp. GME -5.84% , AMC Entertainment AMC -7.40% Holdings and other meme stocks numbered among the hardest hit by Monday’s market turmoil, the latest blow to the favorite bets of many online day traders. 

Videogame retailer GameStop and movie theater operator AMC fell around 6% and 7% respectively Monday, outpacing broader stock-market declines before major indexes turned higher in late trading. The drops extended a slump that has dragged down GameStop shares by one-third this year, while AMC shares have lost about 40% during the same period.

The losses come almost exactly a year after individual investors banded together in online forums to push up prices, sparking parabolic gains. GameStop and AMC, both struggling businesses at the time, finished 2021 with yearly gains of 688% and 1,183% respectively. 

Driving the declines: concerns about likely interest-rate increases by the Federal Reserve later in the year have cooled investor sentiment around Wall Street’s more speculative bets, such as tech firms, blank-check companies and cryptocurrencies. 

GameStop and AMC weren’t the only stocks popular with ordinary investors that fell on Monday. Software company Palantir Technologies shares lost 1%, while U.S.-traded American depositary receipts for Chinese electric-vehicle maker NIO Inc. lost 9%.

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Companies that went public through SPACs, or special-purpose acquisition companies, also have struggled during the recent stock selloff. Hundreds of SPACs have been launched in the past two years, tapping into investors’ enthusiasm to buy anything and a flood of private startups looking to hit the public markets.

Now, shares of half of the companies that finished SPAC deals in the past two years, including commercial real-estate company WeWork Inc. and online lender SoFi Technologies Inc. , are down 40% or more from the $10 price where SPACs typically begin trading. WeWork lost 10% Monday. SoFi fell 4%. 

Shares of Digital World Acquisition Corp. , which is planning on merging with former President Donald Trump’s new digital-media venture—Trump Media & Technology Group—fell 8%.

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ

Write to Sebastian Pellejero at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 25, 2022, print edition as ‘Meme Stocks Hit By Market Turmoil.’

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AMC finished 2021 with gains of more than 1,100%.Sebastian PellejeroSHARE YOUR THOUGHTS
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