Volatility has once again hit the shares of GameStop.
The stock closed about 18.5% higher on Thursday after a huge session in which trading was halted several times due to the sharp move. GameStop rose more than 100% on Wednesday after the company announced that its chief financial officer would resign.
Jim Cramer, host of CNBC’s “Mad Money”, said there might be only one way to justify GameStop’s share price:
“One of the things … we saw Square do – at first it seemed ridiculous, but it was OK; PayPal, the same thing – is that you’re becoming a cryptocurrency trader. Last night on the incredibly good Nvidia call, if one side note, they talked about March. [They’re] going to have real cards just for crypto. It really won’t be important for Nvidia, but it could be important for a place like GameStop. If GameStop were to turn itself into an introduction to 5,000 stores on crypto, make it so that they sell $ 1 billion worth of stock … and buy crypto with it, and then make it an international venue where you win bitcoin, I think you can justify the share price. I could not think of anything else yet, but it works. And it doesn’t have to be bitcoin. We can make it crypto. But turn it into a crypto information palace and you have global games, no latency, you play it and suddenly [GameStop investor and Chewy co-founder] Ryan Cohen – then you can start believing him. Well, the finance chiefs, they tend not to have bitcoin on their balance sheet. Perhaps [resigning GameStop CFO] Jim Bell, this is what he did not want. Ryan Cohen is a great thinker. I feel this is the way to get this stock higher. I can not think of another way. ‘
Alma Angotti, a former Securities and Exchange Commission securities lawyer, expected more interest from regulators:
“It’s important to remember that the security regime is a disclosure regime and that people can make speculative bets on stocks and that people can lose a lot of money. And maybe in the minds of certain people, ice cream tweet related to the CFO resignation tweet and they think the company will be rectified and brought into the digital world fairly successfully. That’s hard to say. But … I think Congress and the SEC will study the balance between orderly markets and get people to invest what they want to invest for whatever reasons they want to invest, even if it does not make sense to us. ‘
Jon Najarian, co-founder of MarketRebellion.com and a CNBC contributor, followed spiking options in three Reddit-powered names:
“It’s volatility on steroids. And at the end of last week, it regularly expired in February. Three stocks really stood out for us, both because of the increase in Reddit posts as well. [a] increase in buying options, and that was GameStop, AMC and Blackberry. When we saw it, it built in late last week … and then it faded, and that’s probably because GameStop bounced a bit on Monday and on Tuesday it dropped to about 55,000 contracts on the call side. It’s pretty low. [On Wednesday], it amounts to 270 000 calls. So, in other words, fivefold jump in volume [Wednesday]. Similar jumps in AMC last Friday saw more than a million call contracts from a low of about 155,000 and then also Blackberry. And all three of them saw excessive movements. In the case of GameStop in particular, … it was just amazing. [On Thursday], they bought $ 200 calls and they traded up to $ 46 for a call from $ 200 to about $ 12 just before we got on the air. There is a lot of fluff and a lot, I try not to belittle them, but a lot of amateur trading rushes those so high up with just one more trading day to go because these options expire naturally. February expires tomorrow during the strike of $ 200. Just crazy. But that’s kind of what’s going on. You get a big herd there – if they get it right, … they can make a lot of money, and if they do not move fast, they have less and less time to get out. ‘
Michael Darda, chief economist and market strategist at MKM Partners, delivered a warning:
“I think we’re all a little confused. When I talk to family and friends, I get a lot of questions about the stocks that are focused in these Reddit forums and also cryptocurrencies. All I say to small investors. “are friends and family, just be careful. Speculate if you want to speculate, but it should be a very small part of your portfolio and do not expect any of these things to be a one-time bet. Definitely necessary here.”
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