Since January, the names of the biggest meme stocks have been uttered in the same breath as they both appeared to subscribe to the same narrative: that short-selling hedge funds are trying to spitefully pull them down and the “Ape army” of retail investors are pushing the prices back up by buying when the numbers dip to create the “Mother of all Short Squeezes.”
But the people holding GameStop
are not the same people holding AMC Entertainment
They never have been, and they’re increasingly sick of being treated as if they are, causing some increasingly visible ruptures in the online communities that govern meme-stock debates.
On Monday, however, people who aren’t cynically short or religiously long either stock showed that they consider them pretty much the same and that they are no longer fond of either … not that they see them separately.
Shares in GameStop plummeted 13.9% as the stock price of fellow ur-meme AMC Entertainment fell 15.3%. Meme stocks more generally took a gentle curb stomping to start the week, thanks to growing fears around inflation, the omicron variant and anxious anticipation of Wednesday’s now all-important monetary-policy pronouncements from the Federal Reserve.
According to Wedbush analyst Michael Pachter, “AMC is down more because of insider selling, and GME down more because of the utter lack of a strategy from Ryan Cohen.”
That could well be true for larger institutions still waiting for GameStop’s activist chairman to be more clear about how he’ll turn the videogame retailer into an e-commerce powerhouse, but based on what we’re seeing today it appears that GameStop stock’s biggest problem is AMC stock … and vice versa.
For AMC, the day was just a continuation of a recent bloodbath for the cinema-chain stock. Playing large roles in that pullback are the insider stock sales by CEO Adam Aron and his CFO that have shaken some confidence in Aron’s outwardly Ape-loving and meme-lord-y corporate leadership throughout 2021.
Aron’s perceived betrayal of the investor base that he has cultivated with Twitter attention and popcorn comes at a most inopportune time for AMC as the “tidal wave” of omicron appears to be ravaging the U.K. and could cut into what Aron has touted as a huge blockbuster-heavy holiday season in movie theaters.
But how Apes really felt about Aron’s sale fell along partisan lines.
“The standard criticism of AA is bullshit,” was the title of one popular post on subreddit r/AMCstock on Monday, referring to Aron by a popular alliterative nickname.
“Any CEO with a brain would regularly sell shares too, especially when they’re up 200%, especially when he might get sued in the future by shorts trying to claim he was ‘encouraging the squeeze’ throughout 2021,” read part of the argument. “They don’t have to be right saying that, they just have to persuade a court.”
Aron had fewer defenders among GameStop retail investors, who are not thrilled that their short-squeeze campaign is still being tied to “the popcorn stock” and who see Aron’s attempts at appeasing his investors with Twitter polls, free snacks and movie-memorabilia NFTs as pandering.
One tweet summed up much of the still-widening schism between self-professed “AMC Apes” and “GME Apes.”
But, as much as the generally bad vibes around AMC might have had a material impact, it didn’t differentiate it much from “the videogame stock.”
According to Dan Pipitone, CEO of TradeZero, AMC was in the top 10 most shorted stocks on his platform Monday. But, overall, AMC’s short volume popped just 0.6%, per data from Ortex, which might be a function of the fact that Fidelity data showed its users were trading AMC at a buy-to-sell ratio of almost 4 to 1.
Pipitone did not see GameStop anywhere near the top of TradeZero’s short trades, but Ortex showed shorts shot up 0.9% on Monday despite a Fidelity buy-to-sell ratio of almost 10 to 1.
Data from HypeEquity showed that social-media mentions of both stocks soared Monday, with 15% of the posts on GameStop mentioning AMC and more than 25% of the posts on AMC mentioning GameStop.
On Twitter and Reddit, many followers of both stocks continued to blame the shady short sellers and market makers that they see as the ultimate evil in the market, and it’s likely that short sellers did play a key and profitable role in such big drops, but there was simply not enough short volume (no, not even the naked type) to really key the action.
On days like this, Reddit and Twitter fill with diehard Apes telling the MSM that “This wasn’t retail!” And, today, we could not agree more. But it wasn’t the hedge funds, either.
What does seem to have happened is that the non-diamond-handed dabblers in meme stocks took Monday’s very bearish macro news, and the recent downturn in both major meme stocks, as a signal that it was time to stop dabbling and just got lighter in both names … which they don’t really see a difference between, anyway.
“This was everybody else,” mused one macro hedge-fund manager close to Monday’s closing bell. “Believe it or not, there are other people in these stocks, and they don’t see buying or selling them as religious. They just see it as trading.”
To these midsized funds, brokers for wealth managers, and non-Ape retail players, meme stocks are now something of an investment class, with GameStop and AMC just key names in their carry.
Meme money still flows
While it might have been a not-so-manic Monday for GameStop and AMC — and Robinhood
and Bed, Bath & Beyond
to be honest — it was a pretty fun start to the week for some biotech penny-stock names that fused the suddenly free cash flow of meme prospectors with the fear of the omicron variant into a market bonanza.
Shares in Biofrontera Inc.
popped 27% as BELLUS Health
soared 48.2% as it appeared that speculation in that sector has returned with cold weather and rising COVID infection rates.