What happened
Meme stock trio AMC Entertainment (AMC -2.01%), GameStop (GME 0.10%), and Tonix Pharmaceuticals (TNXP -1.51%) were all lower in morning trading Tuesday following the long weekend.
At 11 a.m. ET, the movie theater operator and the video game retailer were both tumbling more than 8%, while the biotech was down just 2%. There was no news directly associated with any of the stocks, but GameStop has a tangential relationship to big market news -- though it may surprise a few people its shares are moving in the direction they are.
Image source: Getty Images.
So what
Microsoft announced this morning it was acquiring Activision Blizzard for almost $70 billion in cash, or around $95 per share.
One might think the deal would boost GameStop's shares as Microsoft says it "will accelerate the growth in Microsoft's gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse," the virtual world where users can interact with one another; however, the market may be reacting to the absorption of Activision's 25 million subscribers into Game Pass, Microsoft's gaming portfolio.
Microsoft plans to release future Activision games into the Game Pass universe, arguably stealing away potential GameStop customers in the future, particularly as Game Pass ultimately targets the pre-owned game market.
Now what
Meme stocks seem to rise and fall in sympathy with one another these days, and with AMC and GameStop being two of the biggest, best-known stocks, it could be why shares are falling.
In reality AMC has just been on a slow trend lower since those heady days last June when its stock rocketed to over $72 a share. It has lost three-quarters of its value since, and despite a small bounce here and there, shares just keep falling.
It hasn't been much different for penny stock Tonix, which is now down almost 90% from the highs it reached last March. It only ever got as high as $2 a stub before it began careening lower.
