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GameStop stock plunges for second straight day as Reddit rally stalls

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GameStop’s stock price dropped sharply for a second straight day on Tuesday in a sign that the retailer’s Reddit-fueled rally is losing steam.

The Texas-based video-game chain’s shares plunged more than 32 percent to $152.40 in premarket trading as of 7:20 a.m. on the heels of a nearly 31 percent loss Monday.

The early drop put GameStop on pace to shed more than half of its value in just two days after exploding 400 percent last week thanks to amateur traders on Reddit’s WallStreetBets forum.

Despite the plummeting price, many of the message board’s 8.2 million members pledged to hold onto their GameStop shares to spite the hedge funds that bet against the stock. Reddit users’ efforts to pump up the shares have already led to hefty losses for funds such as Melvin Capital and Point72.

“These are desperate hedge funds trading their stocks back and forth for a lower and lower price, driving the price down,” Reddit user DeludedRaven wrote in a WallStreetBets post late Monday. “The price drop means absolutely nothing AS LONG AS EVERYONE IS HOLDING, this will explode!”

Reddit members pledged to hold onto their GameStop shares to spite the hedge funds that bet against the stock.Nicole Pereira/New York Stock Exchange via AP

GameStop was one of several “meme stocks” to plunge this week after getting pumped up by the WallStreetBets crowd.

Beleaguered movie theater chain AMC Entertainment was recently down more than 24 percent at $10.04 a share after ticking up 0.3 percent on Monday. Smartphone maker-turned-software firm BlackBerry dropped 9.2 percent in premarket trading on the heels of a 3.7 percent gain. And Finnish telecom firm Nokia fell about 2 percent despite DNB Markets reportedly upgrading the stock to a buy rating on Monday.

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Those four stocks were among eight that were remained subject to trading restrictions on the Robinhood investing app Tuesday morning. The financial startup has drawn fire for placing tight caps on the number of shares its customers could buy in GameStop and other companies, though it has relaxed the limits in recent days.

The price of silver, meanwhile, tumbled 5.4 percent to $27.48 an ounce after retail investors helped drive up the precious metal on Monday. While some Reddit users pushed silver over the weekend, some on WallStreetBets urged caution as the price jumped.

“The retail herd may be heading to a Waterloo moment with silver-mania,” OANDA senior market analyst Jeffrey Halley said in a commentary. “The Reddit Army is yelling ‘pump and pump,’ but reality will say ‘pump and dump.’”

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