(Bloomberg) – GameStop Corp. took a breather Thursday morning from its meteoric rise after a brief hiatus from the Reddit forum whose users fueled the stock boom.
The stock fell 6.5% to $ 325 at 4:54 a.m. New York. The stock has advanced more than 1,700% this year, fueling an increase in retail across the board, which has led to short sellers threw in their towels.
Trading has remained very volatile since the last ordinary US session, in which the share rose by 135%. The profit was briefly changed to the Reddit page, which fueled the boom, after a short time, and later reopened by the group’s moderators. By the time the original WallStreetBets board was down, an alternative forum called Wallstreetbetsnew had a peak of 350,000 members.
The breathtaking rise in this month’s shares increased GameStop’s market value to approximately $ 24 billion, making it larger than more than a third of the companies in the S&P 500 index. Only Plug Power Inc. is larger in the closely watched Russell 2000 index, far from the end of 2020 when GameStop, then a $ 1.3 billion firm, was at the center of the benchmark.
“It will end, and probably sooner than we expected,” said Marshall Front, chief investment officer of Front Barnett Associates in Chicago. “At the same time, the power and exposure revealed by Reddit is not going to go away, because politicians will be crazy about this, especially those who oversee the financial markets. We are probably going to see a very thorough investigation by the SEC. ‘
The phenomenon for day trading landed in Washington on Wednesday, when the White House press secretary said U.S. Treasury Secretary Janet Yellen and the Biden government’s economic team were watching stock market activities in GameStop and other heavily shortened companies. Federal Reserve Chairman Jerome Powell eluded questions on the subject during his regular policy press conference.
Senator Elizabeth Warren weighed in and said she intends to make sure security regulators “wake up and do their job.” Not long after, the Securities and Exchange Commission said it was “actively monitoring” volatility in options and stock markets.
Other short seller favorites, such as Express Inc., AMC Entertainment Holdings Inc. and Bed Bath & Beyond Inc., also fell in pre-sale market trading on Thursday, following a surge this week when hedge funds scrambled to cover their negative bets. In Europe, Unibail – Rodamco – Westfield, Ambu A / S and Pearson Plc all declined, while Reddit’s favorite Nokia Oyj rose to 8.6% before falling to 5%.
(Updates with precursors in the last paragraph. An earlier version of this story corrected a company name in the fourth paragraph.)
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