Crypto

Meme Sector Sees Sharp Sell-off as GameStop Plummets 62%, Tokens Drop 25%

GameStop stock plummets 62%, triggering meme token sell-off with losses up to 25%.

By Barry Stearns

6/11, 04:05 EDT
Bitcoin / U.S. dollar
Constellation Energy Corporation
Compass Minerals Intl Inc
FuelCell Energy, Inc.
GameStop Corporation
Huntington Bancshares Incorporated
Honeywell International Inc.
NICE Ltd
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Key Takeaway

  • GameStop (GME) stock plummeted 12% on Monday, extending losses to 62% from last week's high of $61.
  • Meme tokens like Solana-based GME and Roaring Kitty (KITTY) mirrored the decline, falling 25% and at least 10%, respectively.
  • Investor sentiment soured after GameStop announced plans to sell up to 75 million shares and reported a drop in quarterly sales.

GameStop's Impact on Meme Tokens

The recent volatility in GameStop (GME) stock has had a significant ripple effect on meme tokens that often mirror its movements. On Monday, GME stock fell 12%, closing at $24.89, following a 40% drop on Friday. This marks a 62% decline from its two-year high of $61 reached last Thursday. The Solana-based meme token GME, which parodies the company, saw a 25% drop, reversing a more than 200% rally from the past week. Other related tokens like Roaring Kitty (KITTY) and various cat-themed tokens also experienced losses, averaging at least 10%, according to CoinGecko data.

Dog-themed tokens such as Dogecoin (DOGE), Shiba Inu (SHIB), and Floki (FLOKI) also pared gains from the previous week, falling between 4% and 10%. The stock's wild movements since late May have been attributed to the return of retail trader and GME bull Keith Gill, known by his aliases @TheRoaringKitty and "DeepF*ckingValue." Gill's reappearance and his $580 million position in GME equity and options holdings initially boosted the stock's price, putting him on track for a potential billion-dollar exposure position. However, the gains were short-lived as the company announced plans to sell up to 75 million shares, following a $933 million raise from selling 45 million shares, and reported a drop in quarterly sales, dampening investor sentiment.

Broader Market Movements

The broader U.S. equity markets showed mixed results on Monday. The S&P 500 Index rose 0.3%, the Nasdaq 100 gained 0.4%, and the Dow Jones Industrial Average increased by 0.1%. The MSCI World Index also saw a modest gain of 0.1%. Among the biggest U.S. movers, Compass Minerals (CMP) fell 5.8% after appointing a new CFO, while Constellation Energy (CEG) jumped 7.7% as utilities and electrical equipment stocks gained. FuelCell (FCEL) surged 16% after reporting better-than-expected second-quarter revenue.

GameStop (GME) shares fell 15%, extending losses for a second session and losing about $6.4 billion in market value on Friday. Other notable movers included Honeywell International (HON), which rose 0.8% after an upgrade from UBS, and Huntington Bancshares (HBAN), which fell 5.2% after lowering its net interest income guidance for the year. Lions Gate (LGF/A) shares rose 3.5% following an upgrade from Wolfe Research, while Nice Ltd.’s U.S.-listed shares (NICE) increased by 4.1% after announcing a $500 million stock buyback plan.

Meme Token Market Sentiment

The meme token market has been closely tied to the movements of GME stock, reflecting the sentiment and actions of retail traders. The recent sell-off in GME has led to a broader decline in meme tokens, highlighting the interconnectedness of these assets. The return of Keith Gill initially sparked optimism, but the subsequent share sale announcement and disappointing quarterly sales report have weighed heavily on investor sentiment.

The volatility in GME and related meme tokens underscores the speculative nature of these assets. Investors should be cautious and consider the underlying fundamentals and broader market conditions when making investment decisions. The recent events serve as a reminder of the risks associated with meme stocks and tokens, which can experience rapid and significant price swings based on market sentiment and news.