May 20, 2024 - Business

Battle of the meme stocks: How AMC bested GameStop

A line chart that tracks the per-minute share prices of GameStop and AMC from 9:30am on May 13 to 4pm on May 17, 2024. GameStop slightly outperformed AMC for most of the week, but on Friday the 13th it sank to end the week up 28%, well below the 55% gain for AMC.
Data: YCharts; Chart: Axios Visuals

It was Meme Stock Week last week, and despite having a clear early advantage, GameStop ended up losing its stonk crown to rival AMC.

Between the lines: AMC got lucky, while GameStop was slow.

Catch up fast: Keith "Roaring Kitty" Gill, credited with kickstarting the original meme stock mania, returned to X last Sunday with a tweet showing a picture of a man leaning forward in a chair.

  • That precipitated an immediate spike in GameStop stock on Monday, which in turn seemed to drag AMC shares up by some kind of principle of gravitational attraction.

What they did: AMC was already in the process of selling shares to raise money when Roaring Kitty tweeted. The banks in charge of that operation took full advantage of their unexpected good fortune to close the deal and significantly increase the average price paid for the stock.

  • GameStop, by contrast, took until Friday morning to announce that it was planning to sell 45 million newly issued shares.

Follow the money: The two announcements therefore predictably had equal and opposite results.

  • AMC's announcement of the completion of its offering caused its stock to spike at the open on Tuesday — it now had a stronger balance sheet and there were no more shares left for it to sell.
  • GameStop's announcement of the commencement of its offering caused its stock to slump at the open on Friday — no one knew how much money it might be able to raise, given meme-stock volatility. Still, they did know that a very large tranche of shares was about to be dumped onto the market, and they also knew that GameStop's traders had an incentive to sell quickly before the Meme Week rally fizzled out entirely.

Where it stands: AMC ended the week with a share price settling in at a roughly 50% premium to where it began.

  • GameStop saw a much smaller premium, especially after the week ended without Roaring Kitty saying anything about the stock at all.

The bottom line: Even GameStop finds it hard to execute a sustained meme-stock rally these days.

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