GameStop stock plummets as Reddit rally moves to new sector

It could be game over for the “Reddit rally” as GameStop stocks plummet. But while some investors are posting big losses, others are still holding.

The market’s GameStop fever appears to have broken, but other stocks are now starting to feel a bit warm.

Shares in the much-discussed video game retailer were down over 33 per cent by midday on Thursday, adding to a steep decline that has the key player in the so-called “Reddit Rally” down more than 81 per cent this week. Day traders, meanwhile, appear to be turning their interest to other areas like small pharmaceutical stocks.

Stock in AMC Entertainment, a second-favourite “meme stock” for retail traders using Reddit boards like WallStreetBets to topple hedge fund managers they believe are rigging the system, is down more than 45 per cent on the week.

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GameStop shares went into a frenzy in the past weeks on the back of a sub-Reddit push. Picture: Olivier Douliery/AFP

Despite the declines, which have resulted prominent “Reddit rally” investors like Dave Portnoy announcing big losses, the message boards remain filled with optimistic posts and speculation that the slide is merely more Wall Street manipulation.

“There is a second wave of GME coming and here’s why,” Reddit user Meminem posted on Thursday morning. “After hearing about you heroes on the news I decided to open an Etrade account (because this is the second time I’ve seen Robinhood freeze its own clientele out of fat gainz), and those funds are taking 5 days to become available.”

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Many amateur investors were using the Robinhood app which has no fees making it easy to trade. Picture: Olivier Douliery/AFP

But while many old and new Redditors remain committed to “holding the line” despite the carnage, others appear to have found new grass to graze on.

“Did my research, avoided hype stocks, and put $30k into (Cassava Sciences) on a whim yesterday,” Redditor Medthrowaway1121 posted on Wednesday, sharing what appeared to be a screenshot of trading account that showed a $64,300 profit on the stock in one day.

Cassava, a relatively small drug manufacturer that recently announced good news on its drug to treat Alzheimer’s, has seen its shares surge 280 per cent this week and it’s not alone.

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The GameStop mastermind behind the saga, Keith Gill. Picture: YouTube

Shares in small-cap Annovis Bio popped more than 145 per cent since Friday while Anavex Life Sciences has seen its shares soar more than 145 per cent on the week, buoyed by a 70 per cent pop on Thursday.

All three firms are also reporting positive momentum on Alzheimer’s treatments.

Reddit boards like WallStreetBets are lighting up with users signalling their rotation, using screen grabs to tout their apparent gains.

“While everyone was busy with (GameStop) tendies,” one user wrote, using slang for stock profits. “I was eating tendies elsewhere.”

This article originally appeared on the New York Post and was reproduced with permission