GameStop’s share price fell more than 50% on Tuesday to about $ 110 per share. The decline also indicated that the popular WallStreetBets Reddit stock market discussion board – a key factor behind the spectacular rally in the troubled stocks of the video game store and others – may be losing its magic to move the market.
The decline in GameStop follows a large reduction in short-term interest on the stock, which measures how much of the company’s shares were borrowed to sell. Many pointed to the previously high short-term interest rates, and the fact that hedge funds and others betting on the video game retailer were under pressure due to GameStop’s shares.
The decline could also lead to significant losses for some of the individual investors who targeted the positive stock market proposals. WallStreetBets, which has grown in popularity to 8 million members in the past week. GameStop shares peaked at $ 483 on Thursday.
These stocks have now fallen 77% to $ 110 in less than a week. It wiped out nearly $ 27 billion in stock market value for GameStop, which at its peak last week had a market capitalization of $ 35 billion. On Tuesday, the market value fell to $ 8 billion.
The share prices of other companies that rejoiced in WallStreetBets also fell sharply. Shares of movie chain AMC Entertainment also fell about 50% on Tuesday to about $ 6.50 each. The stock was as high as $ 20 last week. BlackBerry’s shares, which were up $ 28 last week, also fell to $ 11 on Tuesday.
The acting chairman of the U.S. Securities and Exchange Commission, Allison Herren Lee, told NPR on Monday that the stock market regulator is investigating various aspects of the sudden rise in GameStop shares, including whether brokers acted and whether there was any market manipulation. She also warned against companies wanting to raise money by selling shares at prices that are apparently driven by social traders and that are not sustainable.
CBS MoneyWatch reported On Monday, the moderators of the WallStreetBets Discussion Board recently tracked down a “large amount” of bot activity in the content of the stock recommendation posted in its group.
And on Monday, Naked Brand Group, which sells intimate clothing for men and women, announced that it had sold more than 29 million shares in a follow-up offer at $ 1.70 each, raising $ 50 million for the company. The company, based in Auckland, New Zealand, is closing all its stores in favor of online sales.
Shares of Naked Brand traded just 7 cents until November. In its listing document, filed with the SEC, the company said the share price has experienced extreme volatility over the past few weeks. It is said that the price fluctuations appear to be driven by chats on social media, as well as a “short interest” in the company, as well as other factors.
On Tuesday, shares of Naked Brand fell to 94 cents each, down 45% from the offer price on Monday. A Naked Brand spokesman did not return a request from CBS MoneyWatch for comment.