(Bloomberg) — GameStop Corp. capped another day of heavy losses, pushing its collapse past 80% this week as retail traders flocked to other corners of the stock market such as small drug developers.
The video-game retailer tumbled 42% on Thursday to $53.50, erasing nearly $30 billion in market value. Trading volume picked up after a slow start, with 60 million shares exchanged after selling accelerated throughout the session.
Meanwhile, demand shrunk for companies such as headphone maker Koss Corp. and apparel retailer Express Inc., which had also skyrocketed over recent weeks. Both stocks have shed more than three-quarters of their value from last week’s peaks.
Still, retail traders using Twitter to communicate about their bullish bets and outlooks helped fuel rallies in Atossa Therapeutics Inc. and Anavex Life Sciences Corp. Cassava Sciences, Inc., a stock whose gyrations were another reminder of how fickle these more speculative trades can be, erased gains of 34% to close lower.
The gains show that Reddit and Twitter are 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 at one point added more than $1 billion to 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. erased gains. The retailer and cannabis firm Sundial reversed rallies to drop about 2% each.
Dwindling interest from retail traders has been apparent for stocks across the market this week, according to Eric Liu, co-founder and head of research at Vanda Securities.
“GameStop net purchases by retail are back to mid-January levels, and retail has actually been net selling everything from silver ETFs to Express,” he said in an email.
Short interest as a percentage of GameStop’s free float slipped again to 51% from a peak last month above 140%, according to data from S3 Partners. That plunge in short interest could signal the squeeze has played out, according Amy Kong, chief investment officer of Barrett Asset Management.
“It is also important to consider market psychology,” she said. “If one sees the stock plunge the way it did over the past two days, it may prompt investors to sell ‘before it’s too late.”’
GameStop 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.
(Updates with share movements throughout)
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