New York – The story of David and Goliath struggling on Wall Street over the stock prices of lost money video game retailers.
A small, optimistic army of investors is buying orders by throwing dollars in GameStop stock, directly against a group of wealthy investors who are hoping for a plunge in stock prices.
The resulting action was wild, with GameStop’s share price soaring nearly 145% within two hours of Monday morning, but profits disappeared shortly thereafter.
The struggling Grapevine, Texas-based company has lost $ 1.6 billion in the last 12 quarters, and its inventories have fallen for the sixth consecutive year before rebounding in 2020. However, GameStop is a target for many professional investors, saying it will continue to be the founder as game sales continue to go online.
These investors are betting that GameStop’s stock will go down. They “shorted” the stock. That is, they wanted to borrow and sell their shares, buy them back at a cheaper price, and put the difference in their pockets. However, such bets have become dire these days.
GameStop was trading for less than $ 18 a few weeks ago. The company’s share price skyrocketed after the company appointed three new directors to its board of directors on January 11 to help speed up turnarounds, including co-founder of online pet retailer Chewy. The idea was that it should help GameStop’s digital transformation.
Meanwhile, hordes of small investors are recommending each other on the Internet to keep the stock momentum on the moon. Many tout it as a battle between the general public and hedge funds and big Wall Street companies.
After announcing the board shakeup, it took only five days for GameStop’s inventory to double. Last Friday it soared 51%. This is a bigger profit than big stocks like Apple and ExxonMobil had in a day. For GameStop, the 51% move was the second best day of the month — and the month isn’t over.
Due to the sharp rise, some short sellers have stepped out of betting by buying stocks, further accelerating their momentum. On Monday, push and pull were so extreme that GameStop’s stock trading was temporarily suspended at least nine times due to volatility.
Monday closed at $ 76.79 after fluctuating between $ 65.01 and $ 159.18 earlier in the day.
“This is quite a bit of experience in the first month of the stock market. Hold it to infinity,” one user posted in a Reddit discussion about GameStop stock. After a while, another user said, “Now we are literally stronger than big companies.”
That same sentiment went far beyond Internet bulletin boards to Wall Street itself.
Edward Moya, a senior market analyst at OANDA, said, “As a college student who started trading stocks in the late 90’s, I’ve always seen small retail trading groups crushed by hedge funds and knowledgeable short sellers. “. Report. “What happened with GameStop stock is a reminder of how the times are changing.”
Copyright 2021 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Small Investors Turn Hedge Funds Over As GameStop Soars
Source link Small Investors Turn Hedge Funds Over As GameStop Soars