Videogame retailer GameStop GME and movie-theatre chain AMC Entertainment AMC firmed on Tuesday after the Securities and Exchange Commission issued a report on trading in the so-called meme stocks.
The report examined the roller-coaster trading of meme stocks in January. It put the kibosh on conspiracy theories circulating on the internet, but it also said market dynamics should be investigated.
Those dynamics include gamification of stock trading apps, payment for order flow and short selling.
GameStop, Grapevine, Texas, recently traded at $187.04 U.S. up 0.6 per cent. It has given nearly a factor of 10 year to date and has skyrocketed 9 per cent in the past month. Many investors and analysts say it s still wildly overvalued.
AMC, Leawood, Kan., recently traded at $43.13, up 0.2 per cent. It s up by a factor of 20 year to date but has eased 2 per cent over the past month. Many investors and analysts maintain that it is still vastly overvalued.
The extreme volatility in meme stocks in January 2021 tested the capacity and resiliency of our securities markets in a way that few could have anticipated, the SEC said in its report.
Further, people may disagree about the prospects of GameStop and the other meme stocks, but those disagreements are what should lead to price discovery rather than disruptions, the SEC said.
It said areas that deserve study include:
Forces that may cause a brokerage to restrict trading.
Trading in dark pools and wholesalers.