Volatility hit GameStop shares again.
The stock closed about 18.5% higher on Thursday, after a tough session in which trading was stopped several times due to strong movements. GameStop grew by more than 100% on Wednesday, after the company announced that its CFO will resign.
Jim Cramer, host of CNBC’s “Mad Money” program, said there could be only one way to justify the price of GameStop shares:
“One of the things I saw Square do – at first I thought it was ridiculous, but it was okay; PayPal, the same thing – is that you have become a dealer in crypto. note, they talked about March. [They’re] I’ll have some real books just for encryption. It really won’t be important for Nvidia, but it could be important for a place like GameStop. If GameStop turns into a 5,000-store cryptocurrency introduction, make it sell for $ 1 billion in stock … and buy crypto with it, then create it to be a international gaming site where you win bitcoin, I think you can justify the share price. I couldn’t come up with anything else, but it works. And it doesn’t have to be bitcoin. We can make it crypto. But turn it into a palace of cryptographic information and you have games worldwide, without latency, you play it and suddenly [GameStop investor and Chewy co-founder] Ryan Cohen – then you might start to believe him. Well, CFOs, they tend not to have bitcoin on their balance sheet. May be [resigning GameStop CFO] Jim Bell, that’s not what he wanted. Ryan Cohen is a great thinker. I feel like this is the way to increase this stock. I can’t come any other way. “
Alma Angotti, a former lawyer for the Securities and Exchange Commission, anticipated greater interest from regulators:
“It is important to remember that the securities regime is a disclosure regime and people can make speculative bets on shares, and people can lose a lot of money. And maybe in the minds of some people, that ice cream tweet was linked to the CFO’s resignation tweet and I think the company will be repaired and brought into the digital world quite successfully. It’s hard to say. But … I think both Congress and the SEC will study that balance between orderly markets and allow people to invest what they want to invest, no matter what reasons they want to invest, even if it doesn’t make sense to us. “
Jon Najarian, co-founder of MarketRebellion.com and a CNBC contributor, followed the spiking options activity in three Reddit-powered names:
“This is the volatility on steroids. And at the end of last week, this is the regular expiration in February. Three stocks have noticed us both due to the increase in Reddit stations and [a] increase the purchase of options, and these were GameStop, AMC and Blackberry. So when I saw that, it was incorporated at the end of last week … and then it went out, and that’s probably because GameStop jumped a little bit on Monday, and on Tuesday it dropped to about 55,000 contracts from calls. It’s pretty low. [On Wednesday], up to 270,000 calls appear. So, in other words, it jumps fivefold [Wednesday]. Similar jumps in AMC that exceeded one million call contracts from a low of about 155,000 last Friday and then Blackberry. And all three saw excessive movements. Especially in the case of GameStop, … it was just amazing. [On Thursday], bought $ 200 calls and traded up to $ 46 for a $ 200 call up to about $ 12 just before they went on the air. So there’s a lot of down and a lot of, I’m not trying to denigrate them, but a lot of amateur trading that follows those so high with just one day of trading, because obviously these options expire tomorrow, February expires tomorrow on the $ 200 strike. Just crazy. But that’s kind of what happens. You have a big herd there – if they catch it well, … they can make a lot of money and, if they don’t move fast, they have less and less time to get out. “
Michael Darda, chief economist and market strategist at MKM Partners, warned caution:
“I think we’re all a little confused. Talking to family members and friends, I get a lot of questions about actions that focus on these Reddit forums and also on cryptocurrencies. So, everything I tell retail investors who are friends and family members, you just have to be careful. Speculate if you want to speculate, but it should be a tiny portion of your portfolio, and don’t expect any of this to be a one-way bet. definitely needed here. “
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