The price of GameStop shares rose on Wednesday, rising back above $ 100, but then fell in the last trading hour to end the day with only 3% from Tuesday and well below its recent highs. The fluctuating share price also suggests that the popular Reddit WallStreetBets discussion forum, which helped increase the period, may lose its magic to move the market.
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.
GameStop shares closed Wednesday at just over $ 92 each, up 3% for the day. The stock price was up $ 483 just last Thursday – a drop of more than 80% in less than a week.
“These things can take longer than people expect, but when they relax they can relax pretty quickly,” said Ross Mayfield, an investment strategist at Baird. “When there will be mania for complete speculation and gambling, someone will be allowed to hold the bag.”
The decline in GameStop shares, which fell 60 percent on Tuesday alone, could lead to significant losses for some of the individual investors who complied with the positive stock market suggestions posted on WallStreetBets. The forum has grown in popularity in the last week, growing to 8 million members. GameStop shares reached a record high of $ 483 on Thursday, amid songs of buy, buy, buy on social media.
Since then, the 81% dip in the price of GameStop shares has wiped out almost $ 29 billion from the company’s stock market value, which at its peak last week was $ 35 billion. On Tuesday, the stock market value or market capitalization fell to 6.3 billion dollars.
The stock prices of other companies that received extended mentions in WallStreetBets returned slightly on Wednesday, after suffering sharp declines the day before.
Shares of the AMC Entertainment movie chain rose more than 10 percent on Wednesday to just under $ 9. The stock, which fell 40 percent on Tuesday, had been up to $ 20 last week. Shares of BlackBerry, which had risen to $ 28 last week, ended on Wednesday, after a slight rebound, to $ 12.
The current chairman of the U.S. Securities and Exchange Commission, Allison Herren Lee, told NPR on Monday that the stock market regulator is looking at various aspects of the sharp rise in GameStop shares, including whether brokers have acted properly and whether they have there was some market manipulation. She also warned against companies trying to raise money by selling shares at prices that seemed inflated by social media-driven traders that were unsustainable.
CBS MoneyWatch reported Monday, that the moderators of the WallStreetBets discussion committee recently detected a “large amount” of bot activity in the content of stock recommendations that was posted in his group.
Naked Brand Group, which sells underwear for both men and women, announced Monday that it has sold more than 29 million shares in a subsequent bid for $ 1.70 each, raising $ 50 million for company. The company, based in Auckland, New Zealand, is closing all its stores in favor of online sales.
Naked Brand shares traded at just 7 cents each in November. In its bid document, submitted to the SEC, the company said its share price had experienced “extreme volatility” in recent weeks. He said that price fluctuations seem to be caused by discussions on social networks, as well as the “short interest” for the company, as well as other factors.
On Tuesday, Naked Brand shares fell to 91 cents each, a 45% drop from Monday’s bid price. A Naked Brand spokesman did not return a request from CBS MoneyWatch for comment.
—The Associated Press contributed to this report.