GameStop’s shares came under renewed pressure on Thursday, dropping 30% to around $ 65, while the video game vendor continued to fall after a social media-driven frenzy pushed its shares up nearly 2,000% from the start of January.
GameStop Actions – which on January 28 were reaching $ 483 each – fell 87% in the last week. The unusual drop cut more than $ 30 billion from the company’s market value.
The stock skyrocketed especially in late January, after amateur investors on the Reddit WallStreetBets discussion forum accumulated shares, with some brokers declaring war on Wall Street hedge funds that had bet against the company. The forum’s popularity exploded last week, reaching 8 million members.
CBS MoneyWatch reported on Monday that WallStreetBets moderators recently detected a “large amount” of bot activity in the stock recommendation content posted to their group.
GameStop’s downturn followed a sharp reduction in short interest on the shares, which measures how many shares of the company were loaned to sell. Many had pointed to that previously high level of overdraft interest and the fact that hedge funds and others betting against the video game retailer were squeezed out, which is why GameStop’s stock soared.
The fall in GameStop’s shares could result in significant losses for some of the individual investors who had taken advantage of the positive stock market suggestions posted on WallStreetBets. Keith Gill, the Reddit trader who claimed to have made tens of millions of dollars leading the effort to invest in GameStop – lost $ 13 million on Tuesday.
The stock prices of other companies that received stimulating mentions on WallStreetBets also fell sharply. Shares in the AMC Entertainment movie theater network fell 12% on Thursday to $ 7.93. These shares, which also fell 40% on Tuesday, reached $ 20 last week. BlackBerry shares, which had risen to $ 28 last week, were at $ 11.84.
Treasury Secretary Janet Yellin will meet with financial regulators this week to discuss the GameStop craze and its impact on investors and the broader markets.
U.S. Securities and Exchange Commission chairman Allison Herren Lee told NPR on Monday that the stock market regulator is examining different aspects of the sudden increase in GameStop shares, including whether brokers acted appropriately. and if there was any manipulation of the market.
—The Associated Press contributed to this report.