The GameStop Corp logo on a smartphone and the Robinhood website on a laptop.
Tiffany Hagler-Geard | Bloomberg | Getty Images
GameStop, the sticker of a recent speculative retail frenzy, tumbled to below $ 50 apiece on Tuesday when the big short press took effect and investors made a profit.
The video game retailer fell 20% to $ 47.81 a share on Tuesday, after falling 80% last week for its worst weekly performance ever. At its peak on January 28, the stock was $ 483 a share.
GameStop came into the spotlight two weeks ago when an army of retail investors who coordinated trading on Reddit’s WallStreetBets forum increased its share by 400% in just one week. The short press has caused hedge funds betting against GameStop great pain, while the mania has forced several online brokers to trade in a string of extremely volatile names.
According to data from S3 Partners, short-term interest in GameStop as a percentage of the shares available for trading fell to around 50% on Friday from more than 130% two weeks ago. Most of the short bets are therefore covered, and there is no significant force of short sellers to keep up the pressure.
Trading volume also fell sharply this week as the retail momentum slowed.
Some people on Wall Street compare the short press of GameStop to Volkswagen in 2008 when the German carmaker soon became the largest company in the world.
Other stocks experiencing increased speculative trading activity are also declining. AMC Entertainment fell 20% this week after a 48% decline last week. Food fell by 11% this week and by 68% in the previous week.
Wall Street breathed a sigh of relief when the madness within a handful of names appeared to be limited and looked like it was dead. Many worried that it would spill over to other parts of the market and have a negative effect on investor confidence.
“We know that financial conditions are supportive and that investors have become more enthusiastic … But that does not mean that the stock market is in a speculative bubble,” said Kristina Hooper, Invesco’s chief strategist.
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