GameStop Corp., the most high-profile target of the Reddit forums, slumped as much as 35% Monday. The video-game retailer surged 1,625% last month, propelled by day traders who inflicted multibillion-dollar losses on hedge funds with large short positions. Short interest in GameStop tumbled to 53% of its float from 140% last month, according to data from S3 Partners.
Robinhood Markets Inc. further eased the trading limits on some stocks on Monday afternoon, informing customers that it could purchase more shares of firms like GameStop and AMC. On Sunday, it had removed restrictions on 42 others. Clients can now buy a maximum of 20 shares in GameStop, and as many as 350 in AMC. The popular trading app put buying limits in place last week after its clearinghouse deposit requirements for equities increased. Other brokerages including Morgan Stanley’s E*Trade also eased restrictions.
The restrictions held the number of shares traded for the Grapevine, Texas-based video game retailer in check while AMC volume took off. At 2:34 p.m. in New York, about 29 million GameStop shares had been traded while AMC’s volume was at 350 million.
CMC Markets, a U.K.-based financial services company, is only allowing long trades on a handful of Reddit-touted companies including AMC and GameStop, according to a spokesman. Other retail darlings like Healthier Choices Management, which trades at fractions of a penny, soared as more than 4 billion shares changed hands and Nokia Corp. rose as much as 9.4%.
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While AMC shares rallied on Monday, the movie theater chain was downgraded to sell from neutral by MKM Partners. Analyst Eric Handler cut the stock and halved his price target to $1, saying that current share prices are almost double the industry’s historical peak.
“The emotion behind the #SaveAMC movement could carry the shares higher in the near-term, but we believe this valuation-be-damned momentum is not sustainable over the long term,” he wrote.
Shift to Silver
The attention of the retail speculators shifted over the weekend to commodities such as silver, which broke above $30 an ounce.
European-listed silver miners surged, with Fresnillo Plc rising as much as 21% in its biggest intraday gain since 2008, and Hochschild Mining Plc climbing 19%. U.S.-listed peers also skyrocketed, with Coeur Mining Inc. up 39%, Hecla Mining Co. jumping 49% and First Majestic Silver Corp. adding 33%.
“So far, it is not exactly the GameStop anomaly, but it is a hint that the retail traders who just discovered the strength of their unity are out there, looking for new targets — and apparently bigger ones,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in written comments.
–With assistance from Joe Easton and Kristine Owram.