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GameStop stock dips below $50 as WallStreetBets frenzy fades

GameStop, Reddit and the Battle of Wall Street
GameStop, Reddit and the Battle of Wall Street 04:22

GameStop shares resumed their recent slide on Tuesday, ducking below $50 in afternoon trade after having soared nearly 3,000% last month amid a social media-driven frenzy in the retailer's stock.

GameStop shares fell as low as $46.58 during the trading session before perking up to close at $50.31, down 16% on the day. The brick-and-mortar seller of video games has seen its market value plunge roughly $32 billion after the stock hit an intra-day high on January 27 of $483. 

Amateur investors on Reddit group WallStreetBets had snapped up GameStop, AMC Entertainment, BlackBerry, Nokia and other beaten down "meme stocks" that some traders said were undervalued by Wall Street hedge funds. 

Shares of theater chain AMC, which narrowly escaped bankruptcy after the coronavirus shuttered its theaters around the U.S., fell 11% to $5.52 on Tuesday and has sunk 73% since late last month. Nokia has dropped 57% since January 27.

Broader markets wavered between small gains and losses in afternoon trading after the major stock indexes hit record highs the day before. Investors continue to keep their eyes on Washington, D.C., where it appears Democrats plan to move ahead without Republican help on a major stimulus bill for the economy.

"The bottom line is simple. The Senate is moving full steam ahead on a bold plan to get this country out of the crisis," said Senate Majority Leader Chuck Schumer during a press conference ahead the start of former President Donald Trump's impeachment trial in the Senate.

Reddit group WallStreetBets hit by bot activity 05:49

The S&P 500-stock index was largely flat less than an hour before the close of trading. The Dow rose 32 points, or 0.1%, to 31,418 and the technology-heavy Nasdaq rose 0.3%. The Russell 2000 index of small company stocks rose 0.5%. A lull after six straight days of gains is not uncommon, as investors pause during a rally to reassess and wait for more economic data to see where the market goes next.

Before Tuesday, stocks had been moving steadily higher for several days as Wall Street becomes more optimistic that the worst parts of the economic impact of the pandemic might be in the rearview mirror. Vaccine rollouts continue both in the U.S. and globally, with the U.S. administering hundreds of thousands of doses per day at this point.

Washington also seems preparing to go big for its next round of economic stimulus to support struggling Americans and businesses. Democrats have rallied around President Joe Biden's $1.9 trillion stimulus plan, which includes a $1,400 one-time payments to millions of Americans.

Lawmakers work to find compromise on another stimulus package 08:45

"Unfortunately, the virus is continuing to mutate, vaccines are taking longer than expected to distribute and achieving herd immunity seems as if it will take a lot longer as a result," Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote in a report. "On the bright side, massive fiscal stimulus (eg, an additional $1.5-$1.9 trillion package in Congress) and an extremely accommodative Federal Reserve should keep equities moving higher while we wait for those setbacks to be resolved."

Traders in cryptocurrencies continued to push up the price of bitcoin after Tesla on Monday announced it is investing $1.5 billion in the digital coin. It was up 10.2% to $47,137, according to the tracking site CoinDesk.

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