MoneyGamestop shares plummet significantly: Reddit vs. Wall Street

Gamestop shares plummet significantly: Reddit vs. Wall Street

The Gamestop share, for which hedge funds and an investor community are fighting a stock market war, temporarily lost over 60 percent of its value on Tuesday.

The shares of the video game store chain GameStop, which has become a symbol of a trial of strength between hedge funds and an investor community, temporarily fell by around 60 percent on Tuesday. On Monday, the price on the Frankfurt stock exchange had dropped by about 30 percent. After the crash on Tuesday afternoon, however, a slight upward trend set in again, the share is currently trading around 90 euros. Last Thursday the share was well over 400 euros, at the beginning of January it was 14 euros.

Shares from Gamestop and AMC , among others, have been particularly popular with users of the Reddit platform in recent weeks. In doing so, they opposed so-called shortsellers (in German short sellers) such as Citron Research and Melvin Capital, who had bet massively on falling prices of the companies in question. As a result, share prices shot up and some hedge funds suffered extremely heavy losses, which are currently said to amount to around $ 20 billion.

Less short selling?

In the meantime, however, the short sellers have significantly reduced their positions in GameStop shares, writes the Handelsblatt , citing data from financial service provider S3. Accordingly, the shortsellers have now reduced their quota, with which they had speculated on falling prices, to 53 percent of the tradable shares. At times, short positions were taken on well over 100 percent of the stock.

A short sale describes the strategy of borrowing stocks in the hope of falling prices – only to buy them back at a cheaper price and then return them when the lending agreement comes due. But if the price rises, the short seller makes losses.

If another investor also makes such a bet on the shares that were sold short, then the number of short positions could also be higher than that of the existing shares, a spokesman for the German Stock Institute explained to heise online. In Germany, such short positions from 0.1 percent of the number of shares must be reported to the financial supervisory authority Bafin, from 0.5 percent there is a reporting requirement in the Federal Gazette, according to the Aktieninstitut.

The short ladder attack

In the r / wallstreetbets community on Reddit, the heart of the investor movement, so to speak, many apparently continue to rely fully on buying and holding the Gamestop share. In a much discussed post , the hedge funds are accused of artificially lowering the price. They would follow a strategy called “short ladder” and push each other’s stocks back and forth at high speed.

At the same time, the trading restrictions on trading apps such as Robinhood, which has now come under heavy criticism , have deprived small investors of the opportunity to counter this. Last but not least, hedge funds are also suspected of hiding the extent of their short sales .

News from the Sherwood Forest

Trading app Robinhood announced meanwhile that it had raised another 2.4 billion US dollars from investors. Including a financial injection from Friday, the recently raised funds now amounted to 3.4 billion dollars, the US company said on the company blog. In view of the recent speculation boom, Robinhood is under increased pressure to obtain collateral for the massively increased trading volume that is processed via the app.

According to a report by politico , Robinhood CEO Vlad Tenev will answer questions at a hearing in the finance committee of the US House of Representatives on the Gamestop stock market war on February 18. US politicians such as committee chairwoman Maxine Waters had voiced suspicions that hedge funds may have influenced Robinhood’s decision to restrict trade. Often the financial service provider Citadel is mentioned, which among other things operates a hedge fund and offers trading systems. As a market maker , the company also has a close relationship with Robinhood. Citadel had reportedly denied it was responsible for the restrictions. ( With material from dpa ) / ( axk )

Florent Malicehttps://www.newsalarms.com/
Malice is an Irish sports journalist and former amateur and part-time road bicycle racer, He wrote for The Sunday Times newspaper and others, and published a number of books.

Latest news

Binance Smart Chain (BSC): a new mechanism to develop the system

The developers of Binance Smart Chair (BSC) have released a proposal to improve the BEP-95 ecosystem, including a mechanism to burn...

Bitcoin (BTC) Analysis, Ethereum (ETH) Analysis: October 21, 2021

Bitcoin (BTC) Unsurprisingly, bitcoin established a new ATH. It would be enough to reach $ 65,000 (€ 55,849), but the bulls decided to...

There will be sports on Polygon (MATIC)! DrafKings becomes network validator

As of May 2021, the Polygon (MATIC) blockchain has become one of the favorite alternatives to Ethereum (ETH) for DeFi users and...

Pakistan not to ban bitcoin (BTC) and other cryptocurrencies

Minister of State for Parliamentary Affairs Ali Muhammad Khan met yesterday in Pakistan with representatives of the National Assembly. The...

What is 2FA (Two-Factor Authentication)?

2FA is the English abbreviation for Two-Factor Authentication, which can be translated into French by two-factor identification. It is a...

Bitcoin may help El Salvador get IMF tranche: Central Bank Governor

The introduction of bitcoin as the official currency will not interfere with El Salvador's negotiations with the IMF for...

Must read

Binance Smart Chain (BSC): a new mechanism to develop the system

The developers of Binance Smart Chair (BSC) have released a proposal...

There will be sports on Polygon (MATIC)! DrafKings becomes network validator

As of May 2021, the Polygon (MATIC) blockchain has become one of...

Pakistan not to ban bitcoin (BTC) and other cryptocurrencies

Minister of State for Parliamentary Affairs Ali Muhammad Khan...

Bitcoin may help El Salvador get IMF tranche: Central Bank Governor

The introduction of bitcoin as the official currency will...

Less dollars, more bitcoins, Salvadorans regain control

alvadorans are investing more and more in Bitcoin to...

You might also like
Recommended to you