- NYSE:GME fell by 12.64% on Friday as meme stocks took a breather from the recent rally.
- GameStop and AMC both tank as diamond hands soften.
- GameStop remains wildly overpriced, but shorting it remains a risky endeavor.
NYSE:GME may be suffering from momentum traders with paper hands coming along for the ride, taking advantage of the Reddit movement against Wall Street. On Friday, GameStop reversed its recent rally and plummeted by 12.64% to close the tumultuous week at $222.00. As strong as the short squeeze has looked over the past few days, it seems as though the stock has gained plenty of followers who are in it purely for the quick profits. After gaining over 40% since Monday, some investors took the opportunity to take their profits on Friday, heading into the long weekend.
Stay up to speed with hot stocks' news!
It wasn’t just GameStop that suffered on Friday, as squeeze leader AMC (NYSE:AMC) also slumped following a rise of nearly 200% this week. This decline comes following another day of over 655 million shares of AMC being traded, blowing away the stock’s average daily trading volume. Interestingly enough, the other meme stocks mostly rose on Friday, including Beyond Meat (NASDAQ:BYND), BlackBerry (NYSE:BB), and Koss Corporation (NASDAQ:KOSS). Is this the end of this current short squeeze? Unlikely. The recent discussions on Reddit state June 18th as a pivotal day when many in the money call options will expire.
GME stock forecast
While history doesn’t always necessarily repeat itself, there is a good chance that this current short squeeze will end in the same way the previous one did: with many retail investors holding the bag. Savvy investors may be looking ahead to buy puts and short GameStop and AMC, as both companies remain wildly overvalued given their current enterprise situations. For now, the safest play is probably to stay on the sidelines, as increased volatility brings with it increased risk.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.