Meme-stock purchases by day traders dropped 28% last week with investors 'falling out of love' with those shares, new data shows

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Meme-stock purchases by day traders dropped 28% last week with investors 'falling out of love' with those shares, new data shows
Pavlo Gonchar/SOPA Images/LightRocket via Getty Images
  • Purchases of meme stocks by retail investors dropped 30% - to $360 million from $500 million - last week, according to research firm Vanda.
  • Buying in meme stocks such as GameStop and AMC has fallen from a weekly peak of more than $900 million in June.
  • Virgin Galactic bucked the trend, however, ahead of the company's planned space flight on Sunday.

Purchases of so-called meme stocks by retail investors dropped sharply last week, with Vanda Research saying the decline highlights that investors are "falling out of love" with that segment of the equity market after their spectacular rallies.

Meme-stock purchases slumped to $360 million, down from $500 million and marking a 28% drop, the research firm said in an update published Wednesday. The firm that stock prices have caught up with weaker demand.

"In most speculative trades, a few unsuccessful attempts to buy dips are followed by a rush to the exit," wrote Giacomo Pierantoni, a research analyst at Vanda whose VandaTrack arm monitors activity in 9,000 individual stocks and ETFs in the US.

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Overall weekly purchases of meme stocks, which include GameStop and AMC Entertainment, have fallen from a peak of $963 million that was notched on June 8.

GameStop, AMC, Bed Bath & Beyond and other companies still hold hefty price gains for 2021 that have been propelled by retail investors working to make money by forcing short squeezes on hedge funds that are seeking to profit from a drop in those share prices. But many of those stocks have come off their highs. AMC traded around $46 on Thursday, down from its peak above $72 on June 2.

But Vanda noted that one of the speculative baskets it monitors logged a significant increase in retail buying this week:

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"Space. Retail investors have been eager to buy dips on Virgin Galactic, likely in anticipation of the next test flight on July 11th, when Richard Branson will be joining a crew of five astronauts," said Pierantoni.

Virgin Galactic shares soared by as much as 17% ahead of Branson's scheduled space plane flight on Sunday.

In a separate gauge of consumer interests, Bespoke Investment Group said results of its tracking on Google Trends of the term"meme stocks" suggests that interest has collapsed.

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"That also applies to the individual ticker symbol of the stock that kicked off the meme stock mania: "GameStop," and searches for AMC have fallen considerably, it said in a Thursday note.

Read more: Morningstar's strategists say these 10 travel stocks are the best placed to soar from pent-up demand as COVID-19 restrictions lift - including 4 picks that look especially cheap

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