Meme stocks stumble after GameStop discloses SEC probe into the frenzy

Looks like Gary Gensler is perhaps doing extra than simply watching meme stocks.

GameStop Corp.

disclosed late Wednesday that the U.S. Securities and Exchange Commission has requested for its cooperation with an investigation into the unprecedented volatility its inventory has seen in latest months. The firm additionally recommended it’s not the just one being probed.

“On May 26, 2021, we received a request from the Staff of the SEC for the voluntary production of documents and information concerning a SEC investigation into the trading activity in our securities and the securities of other companies,” GameStop disclosed in its 10-Q quarterly earnings submitting.

“This inquiry is not expected to adversely impact us,” the retailer stated.

Despite stronger sales in the fiscal first quarter, a smaller $66.Eight million loss and GameStop saying the long-anticipated naming of a brand new chief govt officer and chief monetary officer, its inventory fell by as a lot as 13% in after-hours buying and selling, earlier than recovering some floor.

It wasn’t alone. Shares of AMC Entertainment Holdings Inc.

fell as a lot as 8.3%, BlackBerry Ltd.

5.2%, Koss Corp

1.3%, and Nokia Corp.

0.9% in prolonged buying and selling following the information, with many buyers already bracing for SEC commissioner Gensler to take a more in-depth take a look at the meme inventory phenomenon.

The newly-appointed Wall Street prime cop on Monday signaled that meme stocks had been on his radar when the company said that “SEC staff continues to monitor the market in light of the ongoing volatility in certain stocks to determine if there have been any disruptions of the market, manipulative trading, or other misconduct.”

While considered one of the SEC’s main roles has been to guard retail buyers, some buyers gathered on social media platforms Wednesday afternoon sounded lower than overjoyed by doubtlessly extra oversight of meme stocks.

Several posts on Reddit boards even questioned if the SEC investigation is perhaps targeting bare shorting of meme inventory shares, which could imply extra bother for hedge funds and market makers. Others responded with skepticism.

“Gary Gensler released statements about reviewing payment for order flow,” stated TheIncredibleNurse on Reddit board Superstonk. “We heard them before but now seems [more] official. Maybe the SEC will do something [after all], eventually, once they close Pornhub.”

There additionally had been extra rallying efforts, with a deal with GameStop’s positives and searching previous the poking round from the nation’s greatest monetary regulator.

“Some of y’all haven’t been here since Jan and it f-cking shows,” scolded oXyounceXo. “This is nothing. Buckle up and fu-king hodl.” 

GameStop declined to remark.

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