A GameStop store in New York.
Scott Mlyn | CNBC
GameStop and AMC Entertainment crashed overnight in trading on Wednesday, ready to play back part of the meteoric rally amid a retail buying frenzy.
The shares of the video game retailer decreased by 18% in the expansion of trading, after an increase of 134% during normal hours. The film chain fell by 33% in overnight transactions, after shares rose by 300% in extremely heavy transactions.
The pair were popular targets in the Reddit chat room “Wallstreetbets”, where a wave of home traders are focusing on sharply shortened stocks, pushing the share higher and eliminating short-selling hedge funds.
The forum, which has more than three million members, has briefly become private because moderators have said they are “unable to ensure Reddit’s content policy.”
GameStop amassed over 400% this week alone, bringing its January earnings to 1,700%. AMC also rose more than 450% this week. On Wednesday, more than a billion shares changed their name to AMC, marking the largest volume in history.
Increased speculative behavior among retail investors is raising eyebrows on Wall Street, and many have become concerned that it could be a sign of a stock market bubble at record highs.
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