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Why GameStop Is Falling Today

By Rich Duprey – Aug 10, 2021 at 11:32AM

Key Points

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Being a tag-team duo of meme stocks might not be as appealing as originally believed.

What happened

Shares of GameStop (GME -1.38%) are down 1% in late morning trading Tuesday after opening the day almost 4% higher. This followed the chairman and CEO of AMC Entertainment (AMC 3.92%) saying he was pursuing a collaboration with the video game retailer.

So what

GameStop and AMC are the two premiere meme stocks on the market. Their shares were driven 1,000% higher due to the trading frenzy that broke out earlier this year.

People in theater cheering.

Image source: Getty Images.

The movie-theater operator has openly embraced the internet chatroom traders who have sent its stock soaring. On its earnings conference call yesterday, it only accepted one question from Wall Street analysts. All the others came from shareholders.

One of the questions asked of chief executive Adam Aron -- aside from whether the theater operator would adopt the gorilla as the company's official mascot in honor of the r/WallStreetBets subreddit "apes" who have rallied around its stock -- was whether it would partner with GameStop.

Now what

Aron said that was one of the most-asked questions he's gotten from shareholders recently, and he wanted them to know he was indeed pursuing it. The potential to stream gaming competitions is an opportunity to expand beyond just showing movies in the theater and would help diversify AMC's revenues.

Aron said he hadn't yet contacted the video game company, but noted: "We're on the case. More to come."

The pairing of the two meme stocks probably excited Reddit traders this morning, though the immediate value of the partnership to the video game retailer is probably negligible, which could explain the shares retreating.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

GameStop Stock Quote
GameStop
GME
$27.14 (-1.38%) $0.38
AMC Entertainment Stock Quote
AMC Entertainment
AMC
$8.49 (3.92%) $0.32

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