GameStop shares came under renewed pressure on Thursday, falling more than 40% to just under $ 54 as video game retailer continued to slide after a social media frenzy boosted its shares by nearly 3,000% from the start January.
GameStop Actions – which on January 28 amounted to $ 483 a piece – fell by almost 90% in the last week. The unusual sinking fell by more than $ 30 billion in the company’s market value.
Shares rose particularly in late January after amateur investors on the Reddit WallStreetBets panel piled up in stocks, with some traders declaring war on Wall Street hedge funds that bet against the company. The forum has exploded in popularity in the last week, growing to 8 million members.
CBS MoneyWatch reported Monday, that WallStreetBets moderators recently detected a “large amount” of bot activity in the stock recommendation content that was posted in its group.
The GameStop has followed a significant reduction in short interest on shares, which measures how many shares of the company have been borrowed to sell them. Many have pointed out this previously high level of short-term interest and the fact that hedge funds and others betting against video game retailers have been squeezed out, which is why GameStop shares have risen.
The decline in GameStop shares could lead to significant losses for some of the individual investors who followed the positive stock market suggestions posted on WallStreetBets. Keith Gill, the Reddit marketer who claimed to have earned tens of millions of dollars, driving the momentum to invest in GameStop – lost $ 13 million on Tuesday.
Gill is now facing an investigation by a Massachusetts regulator into potential conflicts of interest over his work as a licensed securities broker and “director of health financial education” for insurance company MassMutual. The regulator’s letter to MassMutual was first reported by the New York Times.
MassMutual told Commonwealth Secretary William Galvin’s office that it had previously rejected a request from Gill to engage in foreign trade. His last day at work was January 28th.
Doubts have arisen this week about GameStop and its online reports as the stock has shrunk, which means trouble for novice investors who came in too late, bought too much and found themselves caught up in a story. epic, made for Hollywood, about the 1% fight.
“We delayed the game a bit,” said 21-year-old Will Binette of Albuquerque, New Mexico, who bought a share of GameStop last week for $ 380. “I don’t care if I lose so much money. It’s about sending a message and redistributing wealth.”
The stock prices of other companies that received extensive listing in WallStreetBets also fell sharply. Shares of the AMC Entertainment movie chain fell 20 percent to $ 7 on Thursday. The stock, which also fell 40 percent on Tuesday, was up $ 20 last week. BlackBerry shares, which had risen to $ 28 last week, were $ 12.15.
Treasury Secretary Janet Yellen is meeting with financial regulators on Thursday to discuss the GameStop craze and its impact on investors and larger markets.
US Interim Securities and Exchange Commission Chairman Allison Herren Lee told NPR on Monday that the stock market regulator is looking into various aspects of the sharp rise in GameStop shares, including whether brokers have acted properly and existed. market manipulations.
—The Associated Press contributed to this report.