(Bloomberg) – GameStop Corp. took a break from its meteoric rise on Thursday morning after a brief disruption to the Reddit forum whose users fueled the surge in stocks.
The shares fell 6.5% to $ 325 at 4:54 am New York time. The stock has advanced more than 1,700% this year, fueling a rise in retail trade across the board, prompting some short sellers to throw in their towels.
Trading has remained highly volatile since the last regular US session, in which stocks were up 135%. The gains were briefly halted in the aftermarket after the Reddit page that fueled the increase was made private and later reopened by the group’s moderators. At the time the original WallStreetBets board was down, an alternative forum called Wallstreetbetsnew had more than 350,000 members.
This month’s breathtaking stock gains boosted GameStop’s market cap to around $ 24 billion, making it larger than more than a third of the companies on the S&P 500 Index. Only Plug Power Inc. is the largest in the Russell 2000 index, very well observed in late 2020, when GameStop, then a $ 1.3 billion company, was firmly in the middle of that indicator.
“This is going to end, and probably sooner than we expected,” said Marshall Front, chief investment officer at Front Barnett Associates in Chicago. “At the same time, the strength and exposure that has been revealed by Reddit is not going away because politicians will run like crazy, especially those involved in the supervision of financial markets. We will probably see a very thorough investigation by the SEC. “
The day-trading phenomenon landed in Washington on Wednesday, when the White House press secretary said that US Treasury Secretary Janet Yellen and the Biden government economic team are watching the stock market activity in around GameStop and other heavily sold companies. Federal Reserve Chairman Jerome Powell dodged questions about the issue at his regular press conference.
Senator Elizabeth Warren gave her opinion, saying she intends to ensure that securities regulators “wake up and do their jobs”. Not long after, the Securities and Exchange Commission said it was “actively monitoring” volatility in the options and stock markets.
Other short sellers’ favorites, such as Express Inc., AMC Entertainment Holdings Inc. and Bed Bath & Beyond Inc. also fell in Thursday’s pre-market trades after an increase this week as hedge funds struggled to cover your negative bets. In Europe, Unibail-Rodamco-Westfield, Ambu A / S and Pearson Plc fell, while Reddit trader’s favorite Nokia Oyj gained up to 8.6% before falling to a 5% drop.
(Updates with pre-market moves in the last paragraph. An earlier version of this story corrected a company’s name in the fourth paragraph.)
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