The video game retailer GameStop, that store where you stumble into the mall while trying to figure out why you’re in a mall, has a pretty big moment on Wall Street. The company hit a market on Friday climbing almost 70 percent before trading it was briefly discontinued due to online dramas involving its actions.
The game store has been in operation since recent changes to the company’s board of directors “triggered a rally” of its shares. Since then, the value of GameStop has continued to rise. Bloomberg reports:
GameStop has grown 245% in January to date, with its 10-day average daily volatility peaking in the nearly two decades the stock has been trading, according to data compiled by Bloomberg. Friday’s strong growth fueled more than $ 4.5 billion.
This growth was partly fueled by a controversial gang of online supporters, daily traders on a reddit thread: r / wallstreetbets. r / wallstreetbets traders have obviously gathered behind the GameStop stock, growing interest through social media, with the notation The Street that redditors are “responsible for pushing the stock to levels it hasn’t seen in years.”
This is where the dramatic part comes in. Critics say online supporters have an unwarranted influence on the stock’s trajectory. Verge, for example, notices that “The hype generated by r / wallstreetbets helped create what is known as the ‘short squeeze’ on the GameStop stock.” A short squeeze, explains Yahoo Finance, it is essentially an increase in stock that “forces short sellers to buy to prevent higher losses, sending the stock price much higher”.
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One of the loudest critics of GameStop was the well-known short salesman, Andrew Left, who runs Citron Research, a newsletter critical of Left companies considered “fraudulent” or doomed to failure. Contrary to rumors, Left predicted the imminent fall of the gaming company.
On Thursday, he released a Youtube video in which he called the company a “failing retailer” and listed the reasons why he thought the company would soon fall to $ 20 per share (instead, it closed at $ 43.03 later that day and rose to $ 65 by the end of Friday).
The drama between the redditors and the Left reached a boiling point on Friday, however, with the Left claiming that there were attempts to log into its Twitter account and also suggesting that his family was somehow harassed. On Twitter, he wrote: “We will not comment on GameStop, not because we do not believe our investment thesis, but rather the angry crowd that owns these shares has spent the last 48 hours committing several crimes that I will teach at FBI, SEC and other government agencies. ”
The left does not have a spotless palette itself. After a controversial report on a Chinese real estate developer in 2012 (short sellers made a package while the company was set in motion), Left was finally banned from the Hong Kong financial market for alleged “false and / or misleading” statements. At the beginning of his career, in 1994, he was also sanctioned by National Futures Association, the self-regulatory body engaged in overseeing the derivatives market in the country, as “part of a wider investigation” into a firm with which it was employed at the time.
Markets Insider writes:
Although it remains to be seen who will win, some indicators have suggested that the bullfight is over. The relative strength index for GameStop shares – a measure of the momentum of the stock – was just below 80, after rising 10% on Thursday. Readings above 70 suggest that the stock is overbought, and the index has not landed below that January 12 threshold.
At this time, it is not entirely clear in which direction the stock is heading.