The astonishing rally of GameStop video game retailer shares creates new millionaires and costs billions of dollars – at least on paper.
GameStop shares rose another 70 percent on Friday, in a staggering rally led by small investors on the Reddit online forum, which saw a 1,800-share increase since early January.
The army of small traders who buy shares swears to keep their shares to force the hedge funds that bet against it to pay through the nose to cover their losses – which means that many of the new fortunes will be wiped out if and when the bubble bursts.
But for now, Robinhood dealers, such as AJ Vanover, who makes about $ 35,000 a year selling car parts in Missouri, are in the money. Vanover’s Robinhood balance exceeds $ 1 million, according to screenshots distributed by CNN.
Keith Gill, the YouTuber, also known as “Roaring Kitty”, was one of the leaders of the GameStop insurgency, promoting the potential of a short press on his YouTube channel
On Friday, Gill distributed a screenshot of its trading account, showing that it increased by $ 31.5 million on a $ 755,000 investment it made in GameStop shares and call options in July.
Vanover, like many others, has not yet cashed in, and his earnings could be wiped out. But if he gets to the winning side of the deal, he says he hopes to help his parents with their mortgage and continue to invest.
Vanover left quarantine this week after a colleague contracted COVID-19, but now believes he will not return to his old job.
“I know I’ll be giving a two-week notice,” he told CNN, laughing. “So I’ll be nice to you.”
Keith Gill, YouTuber, also known as “Roaring Kitty”, was one of the leaders in the GameStop insurgency, promoting the potential of a short press on the Reddit WallStreetBets forum, where users trade tips and opinions about stocks.
On Friday, Gill shared a screenshot of his trading account, showing that it increased by $ 31.5 million on a $ 755,000 investment he made in GameStop in July.
“I thought this transaction would be successful,” he told the Wall Street Journal, “but I never expected what happened in the last week.”
He said he would like to continue his “Roaring Kitty” YouTube channel and buy a house. He also dreams of building an indoor track facility or a country house in Brockton, Massachusetts, his hometown.
The biggest winners of the price action were the long-term and large shareholders of GameStop.
GameStop’s largest individual shareholder, Ryan Cohen, has seen its 13% stake grow by more than $ 2 billion in the past two weeks, or more than $ 6 million an hour.
GameStop investor Donald Foss (left), the former CEO of a subprime car lender, saw his 5% stake in GameStop increase by about $ 800 million, and the share (right) of GameStop CEO George Sherman by 3.4 %, increases by about $ 500 million
GameStop’s largest individual shareholder, Ryan Cohen, saw a 13% increase in the value of the package by more than $ 2 billion in the last two weeks. The co-founder of online retailer Chewy, who joined GameStop’s board this month, initially paid about $ 76 million for the stake and saw its net worth grow by about $ 6 million an hour in the past two weeks.
Meanwhile, investor Donald Foss, the former chief executive of a subprime car lender, saw the 5% package grow by about $ 800 million, and GameStop CEO George Sherman’s 3.4% stake grew by about $ 500 million.
In addition to individual stakeholders, BlackRock, the world’s largest asset manager, could have earned about $ 2.4 billion in its GameStop investment.
The asset manager held approximately 9.2 million shares, or a stake of approximately 13%, in GameStop as of December 31, 2020, a regulatory record showed on Tuesday.
Assuming that no position of BlackRock will change, the value of its share would now be worth 2.6 billion dollars, compared to 173.6 million dollars in December.
Hedge funds face potential billions in losses on bets against GameStop
At the end of the recent loss of the price action were a series of hedge funds, which greatly shortened the shares of GameStop, it seems that the share price will fall.
Short selling is a way to make money from a stock if the share price drops, and GameStop had been one of the shortest stocks on the market when the Reddit group targeted it.
As of Friday, investors who bet against GameStop are facing losses of about $ 19 billion, with damages exceeding just $ 10 billion on Wednesday, when GameStop shares rose 135%, according to data from Ortex provided by Business Insider.
Citron and Melvin Capital hedge funds said on Wednesday they had closed short positions after suffering undisclosed losses.
Citron Research founder Andrew Left – once called the “Wall Street Bounty Hunter” and one of the key investors who bet against GameStop – said Friday morning that he would no longer publish “short reports” and would instead focus on opportunities for “a long time”. ‘investment, a term to bet that a company’s stock will increase.
The notorious short-seller activist claimed that he pulled the plug on betting against GameStop after suffering 100% losses as the stock grew this week.
Melvin Capital, the $ 12.5 billion hedge fund founded by Gabriel Plotkin, was one of the main targets of the Reddit campaign, after an SEC record revealed that the fund had a large short position in GameStop.
New York Mets owner Steve Cohen was also exposed to the turbulent situation after Point72 Asset Management helped save Melvin Capital
New York Mets owner Steve Cohen was also exposed to the turbulent situation after Point72 Asset Management teamed up with Citadel firm Ken Griffin to inject $ 2.75 billion in aid to Melvin on Monday to help the fund in difficulty.
Responding to a worried Mets fan on Twitter who asked if the GameStop situation would impact the team’s pay, Cohen wrote, “Why would anyone have anything to do with the other.”
Maplelane Capital LLC, a New York hedge fund that started the year with about $ 3.5 billion, fell about 30 percent for the year through Wednesday, with its GameStop bearish position a significant loss factor, sources said. for the Wall Street Journal.