Video game retailer GameStop has seen its stock soar, driven higher by a group of amateur day traders on Reddit, who are taking on Wall Street hedge funds. The frenzy has gotten the attention of regulators and lawmakers. Video game retailer GameStop has seen its stock soar, driven higher by a group of amateur day traders on Reddit, who are taking on Wall Street hedge funds. The frenzy has gotten the attention of regulators and lawmakers. There's a good chance you have heard that question many times in the past few days.
The siege by Reddit's WallStreetBets community on institutional investors betting against the stock of video game retailer GameStop is now the stuff of internet and market legend. A loosely organized movement of amateur traders has made GameStop's stock one of the most traded equities on the planet, and one of the most discussed ever. The gambit to buy stock of GME in huge numbers and drive up the price has made some Redditors and their allies life-changing money. A stock that cost $2.57 in the early days of the pandemic rose to around $30 in mid-January and $380 by one point on Wednesday. Early Thursday, the online trading platform Robinhood halted new acquisitions of the stock as the price kept going up past $400, inspiring an immediate class-action suit and widespread outrage among the Redditors and other retail investors, including Ja Rule. Shortly after the stoppage, the stock took its steepest drop of the week, plummeting from nearly $500 at one point in early trading to under $150 after markets opened.
Day traders on the Reddit community r/WallStreetBets, founded by Jaime Rogozinski, drove up the price of GameStop and other stocks, setting up a standoff with Wall Street. Day traders on the Reddit community r/WallStreetBets, founded by Jaime Rogozinski, drove up the price of GameStop and other stocks, setting up a standoff with Wall Street. Jaime Rogozinski says he saw the GameStop chaos coming. "It's fascinating to watch," said the founder and former moderator of WallStreetBets, the now-famous Reddit online forum that recently sent shares of GameStop, AMC and other beleaguered companies soaring in a battle with hedge funds betting the shares would fall. "This is a great conversation that the whole world is having right now," he said in an interview with All Things Considered.
Shares in companies including videogame retailer GameStop soared again on Friday, as an army of small investors taking aim at Wall Street regained access to amateur share trading platform Robinhood. The app, weaponised by activist small investors to trap hedge funds in a "short squeeze" that has cost them $20bn on paper by some estimates, had suspended buying of stocks such as GameStop, cinema chain AMC and BlackBerry on Thursday. But it secured a $1bn (£730m) cash injection from its backers on Thursday evening, which the company said it required to allow its users to resume their buying spree, which began on the WallStreetBets forum of chat forum Reddit. The decision to permit what Robinhood said would be "limited buys" resulted in GameStop's shares climbing more than 67.6% on Friday, taking its notional value to more than $22bn, nearly 80 times what it was worth this time last year. The company's shares had whipsawed a day earlier, finishing the day 44% lower after Robinhood barred users from buying more stock, threatening the Reddit rebellion.
NEW YORK – It sounds like the start of a parable: Investors stuck inside during a pandemic begin to bid up an asset until its price becomes untethered to reality. The value soars until one day the market runs out of buyers and freezes, causing prices to plummet and some unlucky few to lose fortunes more than ten times their annual incomes in the span of a few hours. On that day, the infamous Dutch tulip bubble burst during an outbreak of the bubonic plague, illustrating that asset prices can plummet just as quickly as they soar, leaving only pain behind. Now, almost exactly 385 years and another pandemic later, Wall Street waits to see how long it will take for history to repeat itself. As of Sunday, shares of U.S. video game retailer GameStop Corp. had soared 1,625% since the start of January.