Salvador Vergara was so excited about GameStop Corp. at the end of January, he contracted a personal loan of $ 20,000 and used it to buy shares. Then the buzzy stock fell by almost 80%.
GameStop’s volatile race hits the portfolios of individual investors, such as Mr Vergara, who bought the shares in a frenzy fueled by social media. These regular retailers say that GameStop was their “YOLO” or “you only live once” transaction. They bought around its peak in late January, betting that it would continue the astronomical rise. While some have cashed in before it collapses, others who have hung up their shares are in the red.
Mr. Vergara, a 25-year-old security guard from Virginia, began investing four years ago after deciding he wanted to retire young. To save money, he drives a 1998 Honda Civic, eats a lot of rice and lives with his father. He hid his savings mainly in diversified index funds, which are now valued at about $ 50,000. Then Mr. Vergara, a longtime reader of RedSit’s WallStreetBets page, saw others post about buying GameStop shares and the colossal increase in action.
He did not want to make his investments in the index fund, so he obtained a personal loan with an interest rate of 11.19% from a credit union and used it to finance most of his GameStop acquisition. He bought shares for $ 234 each.
GameStop shares started around $ 19 a year, rose to nearly $ 350 (and reached nearly $ 500 in intraday trading) in late January, then began to return to the ground. Shares closed at $ 52.40 on Friday, down 85% from the close.