GameStop’s epic short-selling war is about to come to an end? GameStop opened down 42% on Tuesday (Jan. 2), and after several meltdowns, the stock price slid further by 60%, and was temporarily trading at about $89 per share before press Time.
GameStop (GME-US) shares, which soared 700% to a high of $325 last week, have now fallen more than 70% since the close last Friday (Jan. 29).
Other retail chasers are also on a selling spree. AMC Entertainment (AMC-US) is down more than 38%; Express (EXPR-US) is down 32%; Bed Bath & Beyond (BBBY-US) is down 14.5%; Stitch Fix (SFIX-US) is down 5.5%. Macy’s (M-US) fell 3.6%.
Jordan Belfort, a former ‘penny stock’ manager and prototype of the Hollywood movie “The Wolf of Wall Street,” said Tuesday that amateur investors in the GameStop trading frenzy could lose everything, and that these types of investments (machines) are great on the upside but painful on the downside.
Robert Kaplan, chairman of the Dallas branch of the Federal Reserve Board (Fed), confessed Tuesday that the massive asset purchase program is one of the reasons for the recent Reddit retailer’s big push to short, although so far no systemic risk is seen.
Robert Kaplan admitted that one of the main reasons for the current situation is that there is a lot of liquidity in the market, which is related to the Federal Reserve’s acquisition of at least $80 billion of U.S. bonds and $40 billion of mortgage-backed securities every month.
Robert Kaplan said, “With the New Crown (CCP virus) Epidemic raging, the Fed needs to keep doing what it is doing at this point, but again, I think it would be healthier for the market to start limiting liquidity and normalizing policy without taking the epidemic into account.
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