GameStop (NYSE:GME) shares dipped as much as 7% on Tuesday, partially reversing the 21% surge seen in the prior session sparked by a social media post from an account associated with the video game retailer’s prominent supporter.
The rally on Monday was fueled by a Reddit post from the user “Deep F—ing Value,” claiming to have invested nearly $175 million in GME shares and call options. However, reports emerged late Monday that Morgan Stanley’s trading platform E-Trade had discussed potentially banning the account linked to individual investor Keith Gill, also known as “Roaring Kitty.”
The momentum behind Monday’s surge was further impacted by a technical glitch at the New York Stock Exchange, affecting several stocks, including GameStop.
CEO Bill Capuzzi of Apex Fintech Solutions criticized the potential ban, stating it was unnecessary and likened Gill’s actions to standard market disclosures by investors like Warren Buffett.
Interactive Brokers chief strategist Steve Sosnick cautioned investors against chasing the rally, emphasizing the importance of considering whose interests are being served.
Gill, credited with sparking the meme stock frenzy in 2021, saw GameStop surge 180% in mid-May after his first X post since 2021. However, analysts have noted that the recent meme stock activity lacks the retail inflows seen in 2021.
Despite the stock sale’s potential dilution effect, GameStop capitalized on May’s rally by selling 45 million shares, generating approximately $930 million in proceeds. Similarly, AMC (NYSE:AMC) raised $250 million through the sale of 72.5 million shares last month.
AMC shares, which gained 11% on Monday, remained relatively stable on Tuesday following the previous session’s surge.
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