While the move led to huge gains for r/wallstreetbets traders, it also caused billions in losses to pile up for short-sellers and institutional investors, some of whom had to be bailed out.ĭata provider Ortex estimates that short sellers were sitting on losses of around $19 billion in GameStop alone in 2021. The value of AMC Networks also increased significantly, mainly because the stock's name is similar to AMC's. 27, r/wallstreetbets triggered a short squeeze on AMC Theatres, a company in a similar position to GameStop. CNBC reported that GameStop jumped as much as 18% to $384.89 in pre-market trading in January as point-and-click investors piled into the name while hedge funds rushed to cover their losses from shorting the stock. Since then, GameStop stock spiked some 1,625% across all of January and over 400% last week alone.
Many other heavily shorted securities also saw price increases. At its height, the short squeeze caused the retailer's stock price to reach a pre-market value of more than US$500 per share. The short squeeze was initially triggered by users of the subreddit r/Wall-Streeters. Around 140% of GameStop shares sold short, and the rush to buy shares to recapture those positions as the price rose caused it to rise even further. Traders on Reddit found out that GameStop had a high short interest rate and realized they could force a short squeeze, causing shares to skyrocket.
Shorting, or short-selling, is when an investor borrows shares and immediately sells them, in the hopes of buying them later at a lower price, return them to the lender and pocket the difference. Then Reddit users on the r/wallstreetbets subreddit built the foundations for a short squeeze on GameStop. It all started after activist investor, and Chewy co-founder Ryan Cohen revealed a significant investment in GameStop and joined the company's board, leading some to believe that the stock was undervalued. Short interest in GameStop shares dropped to 39% of the float, from 114% in mid-January ( IHS Markit data). 2.Īccording to CNN Business, that’s partly due to Robinhood, and other brokers, restricting the number of shares of volatile stocks like GameStop, AMC, Express and Nokia retail investors can purchase in a single stock at a time. GameStop plummeted 60% of its value to $90 per share on Feb. The short squeeze last week that propelled GameStop shares and other investments popular with the Reddit crowd now seems to be on a halt. However, stocks of the brick-and-mortar video game retailer continued to tumble in after-hours trading on Feb. GameStop has been big news in the markets for weeks after the stock became a target of Reddit's Wall Street Bets forum back on Jan. Pooja Lekhi breaks down what happened and why. Still trying to figure out why everyone is talking about GameStop and the stock market? University Canada West professor Dr.
0 kommentar(er)
