After a torrid two weeks of almost non-stop action, things went suddenly eerily quiet in the world of meme stocks on Friday.
As the major meme stocks are likely to end down for the week, the volume of mentions on social media of companies like GameStop (NYS:GME) , AMC Entertainment (NYS:AMC) , BlackBerry (NYS:BB) and MicroVision (NAS:MVIS) , echoed their performance with net social interest in the group down 45% by Thursday compared to the previous week, according to data from HypeEquity.
As the volatility in meme stocks volatility lives and dies by the popularity amongst retail traders on social media sites like Twitter, Discord and Reddit –as evidenced almost too perfectly by the rise and fall of Wendy’s (NAS:WEN) stock in recent day– the drop in mentions seems as much a causation as a correlation.
GameStop earnings report on Wednesday put a serious crimp in what had been a potent surge for memes in June, with the company posting strong results that easily beat Wall Street estimates, but also disclosing that the meme stock phenomenon has drawn the active attention of the Securities and Exchange Commission, which has requested documents from GameStop and others in order to get a look at what caused the unprecedented short squeeze in certain stocks back in January and persisted into June.
The news of the SEC’s interest spread like wildfire on social media, as did late-breaking news Thursday that the hedge fund most-hated by retail traders, Melvin Capital, has continued to lose billions of dollars even after January’s short squeeze dealt the fund a near fatal blow.
On Reddit, users riding out Thursday’s rough trading indulged in some schadenfreude around Melvin Capital’s pain, with many seeing the continuing bleeding as evidence supporting the popular social media theory that Melvin founder Gabriel Plotkin never covered his short positions on GameStop and AMC after getting a $3 billion infusion from fellow hedge funds Point72 and Citadel LLC.
Speaking of Citadel, another signal that social media mentions had turned from stocks to narrative was the sudden Twitter popularity of musical impresario Kenny G.
The alto saxophonist saw his name trend on Twitter as users, many of them retail traders backing GameStop, tweeted negatively about Ken Griffin, Citadel’s founder who is also the CEO of Citadel Securities, a market maker that executes a massive amount of daily trading volume and who retail traders see as an existential enemy and pejoratively refer to as “Kenny G.”
By midday Friday though, some meme stocks were back in the ascendancy, and so were their mentions on social media.