GameStop shares have surged again, ending the week 400 per cent higher as the Reddit-backed frenzy into the gaming retailer continues.
At the closing bell on Friday in New York, the retail stock was up 68 per cent to $US325, ending the week on a high for GameStop investors.
Since the start of the year, GameStop – which is a US bricks-and-mortar video retailer that’s been struggling to compete with the shift to online shopping during the pandemic – was up a staggering 1700 per cent since the start of the year.
The GameStop stock prices rose to unprecedented heights on the back of a “Reddit rally” driven by the WallStreetBets Reddit subgroup which has millions of members.
Spurred on by the social media group, the amateur investors were the catalyst that saw the stock soar after banding together to put a squeeze on hedge funds that had bet GameStop’s shares would collapse.
GameStock was sitting between a meagre $US3 ($A4) and $US10 ($13) per share for most of the past year but rallied last week, hitting a four-day streak of increases never seen before for the stock.
At one stage the stock was trading higher than Apple, Facebook, Microsoft and Disney, as it surged by 93 per cent with its shares climbing above $US300 ($A393).
Billionaire Elon Musk and newly sworn-in Treasury Secretary Janet Yellen are some of the big-wigs with eyes closely monitoring the unlikely stock.
The uprising Redditors recently bought up space on a Times Square billboard, clearly showing they aren’t backing down.
“$GME GO BRRR,” a digital ad on a busy New York corner read. The line refers to a popular internet meme that uses “Brrr” to signify the sound a money-printing machine makes, while GME is the stock’s ticker symbol on the NY Stock Exchange.
Many of the amateur traders are using the Robinhood app to trade which makes it easy to buy and sell with no fees.
But when things started to get out of hand by Thursday last week when the stock fell, the app decided to place restrictions to limit trades on the volatile stocks.
“We continuously monitor the markets and make changes where necessary,” Robinhood said in a statement on Thursday. “In light of recent volatility, we are restricting transactions for certain securities to position closing only.”
This was met with backlash from investors and restrictions were eased again on Friday.
When the stock slid on Thursday, politicians started to call on regulators to do something about the frenzy which was getting out of hand.
The US Securities and Exchange Commission (SEC) on Friday said its regulators were keeping an eye on the rollercoaster share prices of some Wall Street stocks that had been targeted by a social media-driven campaign to make wealthy hedge funds suffer.
“The commission is closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days,” the SEC said in a statement, a day after some platforms restricted trading in GameStop, AMC Entertainment and other stocks caught up in the surge.
“We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws.”
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Some punters are making some serious dough while others have lost life savings.
Even a 10-year-old, Jaydyn Carr of San Antonio, cashed in, seeing a 5000 per cent return on the 10 GameStop shares his mother bought him in December 2019. She paid just US$6.19 a share for around US$60 as a way to teach him about investing. It grew to US$3200 and the boy decided to cash in.
But not all GameStop investors are cashing in. One Reddit user on the thread admitted to gambling away years of savings, posting a screenshot of a US$134,000 loss. “I went from a rational investor to some sick irrational desperate gambler,” the user wrote, but was back on the site just weeks later.
Another who claimed to have lost US$28,000 said: “Lot of people asking if I’m okay. Honestly, not really. It’s going to take a long time to recover financially, and maybe even longer emotionally, knowing how much damage I’ve done to my own life in more ways than just the money.”
A college student and part-time pharmacist, Minhajul, who was born in Bangladesh and was raised in Queens, New York, managed to spin his initial US$1200 investment into a mammoth US$280,000 in just two weeks at the end of July only to lose US$220,000 practically overnight.