U.S. media outlet The National File reported Wednesday (Jan. 27) that stockholders in social media Reddit’s forums, who are buying large numbers of stocks that are being shorted by hedge funds, are pushing Wall Street bearish institutions to the brink of bankruptcy, with exchanges halting trading of GameStop, and the Biden administration is “monitoring the situation.”
Comprehensive mainstream media reports that U.S. stocks GameStop (GameStop) rose more than 120% in the pre-market on Wednesday (Jan. 27). After the U.S. stock market opened, GameStop shares continued to soar, once melting down, and soared 134% to $347.51 by the close of trading. Since Jan. 12, GameStop’s shares have risen 16 times.
The National Archives said bankers were absolutely outraged by the market’s first populist riot. Wall Street traders and hedge funds were very upset because these “ordinary white guys” made their bearish trades and other stock trades fall short of expectations, losing billions of dollars.
Taiwan‘s Technology Newsline said GameStop, a 37-year-old offline retailer of games in the U.S., had been trading below $10 for most of 2020. Ryan Cohen, the founder of Chewy, the largest U.S. pet Food e-commerce company, became the largest private investor by buying a large amount of GameStop stock after last August, and Cohen joined GameStop’s board of directors in January this year, restoring analysts and investors’ confidence that GameStop’s stock would rise. However, this makes short-selling institutions unprofitable, and short-selling institutions must clear out as soon as possible to cut their losses. The National Archives reported that GameStop has become one of the most shorted stocks on Wall Street, with 102% more shares being shorted than the actual shares.
Taiwan’s Technology Newsline reported that GameStop’s stock was picked up by Reddit’s popular forum r/wallstreetbets, whose moderators believe that GameStop’s stock is “a stock with real potential. The forum, which has more than 2 million members, has had considerable influence on stock prices in the past, which has caught the attention of Wall Street traders.
The official Twitter feed of CitronResearch, a leading U.S. short-seller, said, “Anyone buying GameStop stock now is deluded.” They predicted that GameStop’s share price would soon return to below $20. Meanwhile, r/wallstreetbets took the bait and kept promoting GameStop, saying that the size of bearish bets on GameStop by short sellers was already at a high level and encouraging retail investors to buy GameStop stock for bullish bets and to buy GameStop stock if they could and never sell.
The result was that GameStop shares reacted flatly on Jan. 12, rose from the 13th, with shares rising by the day, and soared after Jan. 22 (last Friday) to close at $147.98 on Tuesday (Jan. 26). After the close of the day, Musk tweeted “Gamestonk!!!” (Stonk is a tongue-in-cheek use of the word ‘stockstock’ that U.S. stockholders deliberately misspell, often using the word when some stocks spike or dive too quickly) and posted a link to the wallstreetbets forum.
Taiwan-based newtalk, a new head shell, reported that stocks that Marks had recently tweeted about were going to soar. Marks’ tweet sparked a surge in investor excitement, and on the 27th GameStop’s shares soared to $351.94 per share, ending at $347.51.
Hedge fund MelvinCapital has sought outside help in its “war” with retail investors, with hedge funds Citadel and Point72 expected to invest $2.75 billion in MelvinCapital’s Life, according to the Wall Street Journal. It was reported on Jan. 27 that U.S. $10 billion hedge fund Melvin Capital had closed its short position on GameStop, but the specific amount of the shorting loss is unknown at this Time. According to CNBC, after Melvin Capital, another hedge fund is looking for rescue financing in shorting GameStop deals, but no specific company was disclosed.
In traditional terms, retail investors usually don’t have much of a voice in the stock market. However, GameStop’s current stock price volatility seems to prove that collective speculation by retail investors can drive unusual market volatility using online information alone. In addition to GameStop, BlackBerry, AMC and many other shorting favorites have also been driven up by retail investors, with AMC surging more than 240% before the market on Jan. 27 and continuing to soar after the opening bell, up 301.2% by the close, as retail investors try to force the previously persistent shorting institutions to “surrender.
Many on Wall Street and in the traditional financial press were so frustrated with the short-selling of GameStop stock that they compared the action to hacking a website. Nasdaq’s Adena Friedman even claimed that they would suspend certain stocks if they matched “social media gossip” with “unusual” stock activity, and several exchanges have now Several exchanges have now banned trading in other GameStop stocks.
Adena Friedman is an American businesswoman. She currently serves as president and chief executive officer of Nasdaq.
A Wall Street hedge fund trader told the New York Post that the situation is a “bloodbath” and that he is frustrated that “the average white guy has figured out how to play short” and still beat his opponents in the process. He added, “It’s carnage.” Short sellers, who have been manipulating the market for years and making big profits, are now frustrated by the first “populist uprising” in the financial markets, the Hill reporter stressed.
Bloomberg’s White House correspondent Jennifer Epstein asked White House press secretary Jen Psaki what the Biden Administration‘s reaction was to the rise in GameStop stock and whether there had been “any conversations with the Securities and Exchange Commission (SEC) “. Passaki reiterated that the Biden administration appointed Janet Yellen, the first female Treasury Secretary, and that Yellen and the White House economic team will “monitor the situation.
Subreddit could also be threatened, and the chairman of WSB, subreddit’s unofficial Twitter account, believes that if subreddit is canceled for its role in the air, then “it would be better to start by canceling all the Wall Street hedge funds that are endlessly using mob tactics to make a quick buck. “
Investors are the first to benefit from the dramatic rise in GameStop’s stock price. The people behind the WallStreetBets forum, the second biggest winners of this short selling process, are behind the scenes eating popcorn and watching the show.
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