They may now seek to impose new restraints on traders, including stiffer penalties for market manipulation or tougher protections for small-time investors. The Securities and Exchange Commission said Wednesday that it’s noticed all the volatility in the market, though it did not name GameStop specifically. The agency said it’s “working with our fellow regulators to assess the situation and review the activities” of investors in the market.
But the broader concern comes when what are known as retail investors — amateurs buying stocks for their own personal gain — become overly exuberant and inflate stock prices, sometimes by taking out loans to buy shares. GameStop has risen from a low of $2.57 a share when Burry was building his position this spring to over $365 by early Wednesday afternoon, as a band of amateur speculators have used social media app Reddit to corner GameStop’s heavily shorted stock. The ensuing surge in GameStop’s shares has created a squeeze reminiscent of Volkswagen’s 2008 rise to a half-trillion dollar market cap during the depths of the 2008 crisis, which led to about $30 billion in realized hedge fund losses. Top Glove, Hartalega and Supermax respectively recorded increases in shares as high as 15 percent, 10 percent and 9.2 percent during intraday trading on January 29, before closing with respective increases of 8.5 percent, 5.4 percent and 3.7 percent.
It is indeed a giant casino, and like any casino, it’s rigged to the benefit of the operators and their partners. No wonder watching hedge funds scramble to cover their positions brings out a perverse pleasure in small-time day traders and socialists alike. If, however, the stock prices begin to rise, you’ll want to repurchase your stocks quickly to limit your losses. When this happens, you contribute to increasing the stock price even more, and a short squeeze may be triggered. Read more about buy IGFollowers here. Because so many people had shorted GameStop’s stock, there was a buying frenzy as everyone tried to repurchase their stocks before prices rose even more—ironically causing the stock to continue to rise.
After shares experienced their initial pop roughly two weeks ago, gains have continued in pronounced fashion and amounted to more than 300% this week alone, through Tuesday’s close. The first few days of gains saw Wall Street Bets members cheer the rally and beg more to join in. Posts made it to r/popular, Wall Street Bets members gained online infamy, more casual investors were introduced to the trend, and a cycle began. Ultimately, meme stocks won’t make much of a difference to most long-term investors; however, there’s nothing keeping Redditors or memers from attacking a stock that they found to be amusing or remotely funny… American social game developer Zynga has plans to launch non-fungible token games in the near future.
To mitigate this, the DTCC requires member firms to post collateral to cover settlement through the two-day cycle. The collateral calculation is based on the notional value of trades to settle and their volatility. In the aftermath of Reddit’s short squeeze of GME stock, Keith Gill, a.k.a. known by his Reddit username Deepf—ingvalue , is under investigation and is due to appear at congress.
There is little in fighting, incredible journalism, sophisticated analysis, supportive threads, critical thinking about macroeconomic trends as well as some memes that will surely be in museums of fine art one day for their cultural significance. Overall, it is among the most positive communities on the internet. Notably, the imposition of these standards almost exclusively eliminated negative sentiment and proactive instigation of infighting. All the new misinformation bot accounts seemed to soley exist to push a narrative and give the appearance that there was much more division than there really was among actual, established Reddit users. My friend lends me $100 (or in Gamestop shorter’s case, $2 billion). Now I have $300 in cash, but owe ten shares that are currently worth $250 total.
For a decade or more, the retail store was the one-stop-shop for any gamers that lived near one. But in recent years, the company has fell on hard times as digital stores on consoles and PCs, like Steam, have made the brick and mortar game store a concept of the past. The final nail in the coffin was presumed to be the COVID-19 pandemic; that is, before the events of this past week. One is the move to digital downloads from consumers, which now represents 40% of all games sold. In contrast, GameStop’s digital sales only represented about 6% of their total video game sales in 2012. Electronic Arts’ COO predicted a few weeks ago that digitally delivered video games may account for 50 percent of sales by 2015 as more players migrate to tablets and smart phones from consoles.
Not trying to be a negative ass but we’ve have zero examples of HFs getting more than a slap on the wrist and a million dollar fine. The gurus who had been predicting a video game resurgence had, however, been right except it just did not happen in quite the way they had imagined. What occurred was that the same people who had bought the new consoles from the retailers also decided to go elsewhere for their video games – they went directly to the publishers from whom they could download the games. Interestingly, the largest video game retailer in Europe, Game Group, reports that 18 percent of its business is in used games, mainly in the UK.
Suddenly everyone was talking about “stonks.” GameStop went viral, a narrative emerged. The hedge funds trying to short America’s beloved mall video game retailer were the villains; Redditors and others buying GME stock to drive up the price and “squeeze” the short, were the heroes. There were similar efforts to rally around the stocks for the AMC theater chain and Dogecoin. On Thursday, Robinhood and TD Ameritrade, two services often used by retail investors, restricted trading on GME after its price shot toward $500 per share.