Opinion: Things are looking up for GameStop and AMC as retail buys in a downturn, but things still look pretty dire for Robinhood
Who doesn’t love a good Christmas dip?
GameStop GME actions,
and AMC Entertainment AMC,
On Tuesday, the two rebounded from Monday’s fall, advancing 7% and 5.3% respectively, as retail investors stalled with their long-standing investment thesis on BTFD, or “buy trough.” the wave “.
After GameStop fell nearly 14% and AMC fell more than 15% to start the week, furious retail investors were back on Tuesday to support some of their favorite tickers.
However, growth in the volume of short interest on both stocks was much higher on Tuesday than it was the day before. None of the memes stocks broke the 1% mark on Monday, but short interest in GameStop rose more than 7% at Tuesday’s close, and AMC’s short volume increased by more than 3%. , 5%, according to Ortex data.
Fidelity data showed a closer [albeit still very wide] buy-sell ratio on both stocks versus Monday. Buy-to-sell ratios are being watched closely by the memes crowd, as they can be an indicator of investor sentiment.
The rally in popular memes comes as U.S. stock indexes posted back-to-back losses on Tuesday and almost everyone in finance is waiting for the Federal Reserve to announce its stance on cutting its bond purchases on Wednesday.
The potential impact of the reduction in asset purchases by the US central bank on HODLing ‘Ape’ retail stocks remains a sort of reflective experiment, not to mention the possible Fed hike in key rates. [We’re placing our bets on “not much.”] But this move could have a major impact on short sellers who could live in a much richer target environment, especially if struggling companies feel the pandemic-era cash sprinkle begins to drain from the markets. financial. There is also the joker of the Department of Justice.
But what might be most interesting about Tuesday’s action is that the two “Memo Mother actions” moved in the opposite direction to what the data would indicate if they were compared side by side, which means that the real action remains almost entirely in all types of options.
And we also liked that they were moving together because that’s our problem now, and it’s nice to see everyone at MemeLand getting along, even if it’s only for a day.
We would be remiss not to also include the note that near-besieged AMC CEO Adam Aron threw a happy, unsubtle tweet near the closing bell, inviting his AMC Apes to theaters this weekend … but not Spiderman.
Robinhood: Not in front
Speaking of plummeting stocks that have benefited from a long and low interest rate environment, let’s look at Robinhood HOOD,
The commission-free trading app, which in retrospect could have been the facial tattoo moment of our descent into cheap money addiction, closed 3.9% on Tuesday at $ 19.13, a down 49.6% from its IPO price in July.
And when your stock is almost 50% below its IPO price before SEC comes after your ‘pay for order flow’ business model [which many inside the Beltway and Wall Street think will happen, in some form, in 2022], that’s not great.
But Robinhood, which may be reaping the whirlwind for introducing a new generation of retail investors to ‘free’ options trading and then ticking them off right before the IPO, has already become a darling. short sellers.
Shorter Robinhood over the summer was not cheap with the company’s borrowing rate hovering around 75%, meaning stocks would have had to fall quickly for short bets to pay off. But now the rapid fall in the stock price hasn’t just paid off, it has lowered the barrier of entry for less affluent investors looking to sell HOOD.
50% in less than five months? This makes many short sellers very happy and can turn very unhappy former Robinhood users into short sellers.
And we don’t see many falling buyers here in a steadily declining name since mid-August. I guess that’s what happens when you kill the MoASS …
Trump’s media SPAC is outsourcing its cloud infrastructure to Rumble, which also has a SPAC… so maybe just buy that SPAC because it’s… doing something?
According to a press release issued Tuesday by Trump Media & Technology Group, which is totally one thing as it is made public with a $ 1 billion PIPE from Digital World Acquisition Corp. DWAC,
Trump Media & Technology Group announced today that it has entered into a major cloud technology and services agreement with Rumble Inc. As part of the partnership, Rumble will provide video and streaming for TRUTH Social. TMTG and Rumble are also in exclusive negotiations for Rumble to provide infrastructure and video delivery services for TMTG’s subscription video-on-demand product, TMTG +.
That’s great. TMTG and new CEO / outgoing Congressman Devin Nunes will be able to outsource how he distributes all this premium content to TMTG + subscribers… once he has content – or a plan to produce that content.
But it’s also cool for Rumble, which is also being made public via a SPAC called CF Acquisition Corp VI CFVI,
Shares in YouTube’s conservative response to SPAC rose more than 15% after the bell on Tuesday, begging the question: why not just invest in Rumble?
Who are we kidding? Nobody buys DWAC / TMTG for the airtight business model or warrants which are basically a retail investment hand grenade that you can keep in your Fidelity account once the SEC gives up and lets this thing be merged and listed.
TMTG is the purest growth story of all time: no products, huge valuation, fascinating hires, pre-launch deals. This makes Snapchat’s SNAP,
entry into public markets looks like the D-Day invasion… and it trades at 5x on partisan sentiment.