Fears of increased regulatory oversight in the "meme stock" space led to some big drops for the week ended June 10.
In prepared remarks at the Piper Sandler Global Exchange and Fintech Conference, U.S. Securities and Exchange Commission Chair Gary Gensler on June 9 said the Commission's current rulebook was created for a trading environment that no longer reflects today's markets.
Gensler was referring to the retail trading renaissance that has fueled stocks like GameStop Corp. and AMC Entertainment Holdings Inc., as well as the ways brokerage platforms such as Robinhood Markets Inc. and trading wholesalers interact to handle retail trading.
"I've asked staff to make recommendations for the Commission’s consideration ... with the aim of continuing to make our markets as efficient as possible," Gensler said.
GameStop shares tumbled from $337 to $288 apiece during June 8 intraday trading. The legacy brick-and-mortar video game retailer recovered losses slightly after reporting relatively strong fiscal first-quarter earnings but fell sharply after disclosing in a June 9 filing that the SEC was investigating trading activity in its stock.
Wedbush analyst Michael Pachter raised GameStop’s price target to $50 from $39 but maintained an underperform rating.
Shares of GameStop closed at $220.39 for the week ended June 10, down more than 11% for the week to date.
GameStop was not the only retail frenzy favorite that took a hit this week, as shares of AMC Entertainment also took a steep fall.
Retail investor uncertainty in the theater giant intensified when company executives disclosed in a series of filings that members of its board of directors sold a total of nearly $4 million worth of shares since June 8.
After filing to sell some 11 million shares last week, AMC issued a warning to potential shareholders not to buy the stock "unless you are prepared to incur the risk of losing all or a substantial portion of your investment."
AMC shares closed at $42.81 on June 10, down more than 10% for the week to date.
Pivoting to the tech space, Big Tech equities held sturdy in trading throughout the week, despite calls from the Group of Seven finance ministers to impose a landmark 15% global minimum tax rate to deter multinational companies from stockpiling earnings in low-tax countries.
Major name-brand players in tech signaled their support for the G-7 proposal. For instance, an Amazon.com Inc. spokesperson called the agreement a "welcome step forward."
Shares of Amazon performed well throughout the week, closing just short of $3,350 apiece on June 10, up almost 4.5% for the week to date. Alphabet Inc. shares also had a good week, increasing nearly 2% to close June 10 at $2,435.13 per share.
Facebook Inc. and Apple Inc. remained nearly flat throughout the week.
In the short term, the G-7 deal is unlikely to hurt Big Tech, according to analyst input on the proposed legislation. Ian Williams, an economist and strategist at U.K.-based investment bank Peel Hunt, expects a minimal market impact from the proposal on large technology companies, at least for now.
"No G-7 nation currently charges that low a rate and the details, including agreement from numerous smaller countries, require plenty of work," Williams wrote in a research report.
The G-7 proposal still needs support from the Group of 20 economies, which is made up of 19 advanced and developing countries and the European Union, as well as buy-in from the Organisation for Economic Co-operation and Development and the more than 100 countries that are part of a group known as the Inclusive Framework that has been negotiating the new tax rules.
Finance leaders from the G-20 are set to meet in Venice, Italy, July 9-10 to discuss the new proposal.