Shares of video game retailer GameStop and others soared last January. The U.S. staged netizens crushing hedge funds, causing heated discussions around the world. With the exposure of one of the key figures behind the counterattack, the follow-up development is still worthy of attention.
The BBC notes that GameStop is an American video game retailer. In the age of online streaming, GameStop still specializes in physical video games. Its business performance has struggled to keep up with the times, with a loss of $795 million in 2019.
But GameStop’s stock skyrocketed in a matter of days. The reason is that some retail investors used the Reddit forum to initiate the purchase of GameStop stock, which caused the stock price to rise. They intend to sabotage these attempts to short the GameStop Investment Fund. As a result, some hedge fund firms have been forced to buy back shares before they peaked, with one firm, Melvin Capital, reportedly spending $2 billion to cover losses.
In addition to Reddit, Elon Musk, the founder of electric car company Tesla, also tweeted his solidarity with a link to the Reddit discussion forum, adding fuel to the incident.
Shares of GameStop surged 135% on Jan. 27, The Wall Street Journal reported. At one point it reached a record high of $347.51 per share. Although it fell back later, with the support of retail investors, the stock price returned to $325, and the monthly line soared 16 times. GameStop is trading at just around $18 in early 2021.
Others, such as AMC, the leading global theater chain that once fell into bankruptcy, also saw their stock prices skyrocket under this wave of retail investors’ counterattacks. AMC’s share price rose more than 5 times in a single month, and American retail investors joined together on online forums such as Reddit. Accumulated buying has completely repulsed the short sellers.
After a number of hedge funds suffered huge losses from shorting GameStop, popular brokerages including Robin Hood took measures to cool the market, but the move sparked investor dissatisfaction and lawsuits.