- NYSE:GME tumbled by 27% on Thursday, as meme stocks were crushed by the broader markets.
- GameStop revealed it is planning to raise capital by periodically selling shares.
- The corporate shakeup and SEC investigation seem to be scaring investors away.
NYSE:GME may be seeing the beginning of the end of its coordinated short squeezes as the SEC and big banks are closing in. Shares of GameStop went into freefall on Thursday, dropping by more than 27% to close the day at $220.39, as investors were less than thrilled following GameStop’s annual shareholder meeting. We previously mentioned that GameStop has a habit of plunging the day after its annual meeting, and it is interesting to see that this year was no different.
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The main catalyst for investor sentiment souring on GameStop was that the company revealed it would be selling shares periodically to raise further capital. At these inflated prices, GameStop would definitely be ill-informed if they did not take advantage and sell some more shares, even if it does dilute shareholder equity. The company said it would raise up to $5 billion at a time at some point in the future. Shares of GameStop were already crashing during after hours trading on Wednesday, dipping by 8% at one point during the investor presentation.
GME stock news: GameStop Corp
GameStop also announced that it was formally under investigation by the SEC as it tries to crack down on short squeeze events on social media. Earlier in the week, some of the biggest financial institutions in the US also revealed they would be restricting naked short positions on meme stocks by institutional investors. Meme stocks tumbled across the board as AMC (NYSE:AMC) fell a further 13%, Clover Health (NASDAQ:CLOV) dropped over 15%, and BlackBerry (NYSE:BB) plunged more than 8%.
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