GameStop Corp. shares fell for a third day in four as retail traders flocked to other corners of the stock market such as small drug developers.
The video-game retailer sank 17% and touched this week’s low of $73.88 at 10:40 a.m. in New York as trading volume continued to dry up. About 12 million GameStop shares had changed hands in the first hour of trading, or about half of what’s been typical for the stock over the past two weeks. Demand was also lower for companies such as headphone maker Koss Corp. and apparel retailer Express Inc., which had skyrocketed over recent weeks.
The volatility in GameStop’s shares have resulted in market value swings of over $30 billion for the company this year. But the euphoria surrounding the stock, which was born in day-trader chat rooms, seems to be turning now to groups of smaller names, such as drug developers.
Retail traders using Reddit to communicate about their bullish bets and outlooks have helped fuel rallies in Anavex Life Sciences Corp., Cassava Sciences Inc., and MannKind Corp.
The gains show that Reddit is continuing to “play a major role in trading action” for single stocks, wrote Jared Holz, a Jefferies health-care equity strategist.
A trio of biotechs chasing after Alzheimer’s cures added more than $1 billion into their market value on Thursday after Cassava reported results from a small study in 100 patients earlier this week.
Reddit and Twitter users extolled upon the virtues of biotechs chasing after new medicines for Alzheimer’s as well as Covid-19 and cancer, though new drugs in development face long odds on making it to the market.
Other companies favored by retail investors, including Naked Brand Group Limited and Sundial Growers Inc. also traded higher as millions of shares changed hands. The retailer rose 4.1% while cannabis firm Sundial rose 5.7%.
GameStop shares are down 75% this week and have lost momentum even after news of a trio of executive hires, including the appointment of a chief technology officer.
While the executive additions are “all great hires on paper” it’s hard to attribute recent share movement to anything in particular, Wedbush Securities analyst Michael Pachter said in an email. The analyst, who rates the shares at neutral, said he looks forward to hearing details about the company’s strategy.
GameStop grabbed headlines this month after a coordinated effort by retail investors to squeeze short sellers caused the stock to surge multiple times. It has lost more than 80% of those gains in recent days, but despite that has still added about $4.5 billion in value this year.
This article was provided by Bloomberg News.