GameStop shares came under renewed pressure on Thursday, dropping 30% to about $ 65 as video game sellers continued to slide after a social media-driven frenzy boosted its stock nearly 2000% since early January.
Shares of GameStop – which rose to $ 483 apiece on January 28 – fell 87% in the past week. The unusual dip kicked off more than $ 30 billion of the company’s market value.
The stock rose especially in late January, after amateur investors on the Reddit discussion board piled up WallStreetBets in the shares. Some traders have declared war on Wall Street hedge funds betting against the company. The forum exploded in popularity over the past week, increasing to 8 million members.
CBS MoneyWatch reported Monday that the moderators of WallStreetBets recently discovered a “large amount” of bot activity in the content of the stock recommendation posted to his group.
The GameStop tumble followed a major 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 level of short-term interest rates, and the fact that hedge funds and others betting on the video game retailer were under pressure due to the fact that GameStop’s shares had soared.
The decline in GameStop shares could result in significant losses for some individual investors who have made positive proposals in the stock market. WallStreetBets. Keith Gill, the Reddit trader who claims to have earned tens of millions of dollars in the push to invest in GameStop – lost $ 13 million on Tuesday.
The share prices of other companies that received significant mention in WallStreetBets also fell sharply. Shares of movie chain AMC Entertainment fell 12% to $ 7.93 on Thursday. The stock, which also fell 40% on Tuesday, was up to $ 20 last week. BlackBerry’s shares, which climbed to $ 28 last week, were $ 11.84.
Finance Minister Janet Yellin will reportedly meet with financial regulators this week to discuss the GameStop mania and its impact on investors and the wider markets.
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 appropriately and whether there was any market manipulation. .
—The Associated Press contributed to this report.