Reddit Winners Struggle to Hold Onto Gains Amid Broad-Based Rout
(Bloomberg) -- A move by brokerages to curb trading sent most of the hottest Reddit-fueled stocks lower Thursday after initial gains earlier in the session.
The share price of headphone-maker Koss Corp. declined 28% at the end of the regular trading day after earlier rising as much as 120%, paring this week’s gain to 1,156%. Meanwhile, swimwear manufacturer Naked Brand Group Ltd. finished the day up less than 1% after rising as much as 146% earlier in the session, bringing its weekly gain to about 214%. The week’s increases came as hedge funds scrambled to close short trades on a number of companies touted on Reddit’s WallStreetBets forum.
The most-prominent example of the recent short squeeze mania, GameStop Corp., fell 44% on Thursday. The stock had surged 1,745% this year prior to that decline.
XpresSpa Group Inc., an airport spa operator that pivoted to Covid-19 testing, dropped 4.6% after surging 37% in the first three trading days of the week, with Reddit users dubbing it the “next short squeeze.” Other short favorites that declined Thursday included biotech CEL-SCI Corp., which fell 22%.
Cinema group AMC Entertainment Holdings Inc., meanwhile, dropped 57%, having erased its pandemic-induced plunge Wednesday with a 301% surge. Retailer Express Inc. slipped 51% following a surge this week, while Bed Bath & Beyond Inc. and fashion firm Fossil Group Inc. also declined Thursday, down 36% and 38%, respectively.
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