GameStop shares soar after unlikely boost from Reddit users, 2 hedge funds flinch
Updated Jan 27, 2021;
Posted Jan 27, 2021
FILE - Two hedge funds are bowing out of their short positions on the money-losing video game retailer GameStop. Citron Research’s Andrew Left said in a video posted on YouTube that his company is going to become more judicious in shorting stocks. Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. (AP Photo/Jeff Roberson, File)
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Two Goliaths, actually.
A pair of professional investment firms that placed big bets that money-losing video game retailer GameStop’s stock will crash have essentially admitted defeat. The victor, for now at least, is a volunteer army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.
Nam Y. Huh/AP Photo (file)
A David and Goliath saga is unfolding in financial markets over the stock price of struggling retail chain GameStop. On Wednesday, Goliath walked away from the battle.
Two Goliaths, actually.
A pair of professional investment firms that placed big bets that money-losing video game retailer GameStop’s stock will crash have essentially admitted defeat. The victor, for now at least, is a volunteer army of smaller investors who have been rallying on Reddit and elsewhere online to support GameStop’s stock and beat back the professionals.
GameStop’s stock surged as high as $380 Wednesday morning, after sitting below $18 just a few weeks ago.
Across most of America, GameStop is just a place to buy a video game. On Wall Street, though, it s become a battleground where swarms of smaller investors see themselves making an epic stand against the 1%. The funds serving the financial elite are starting to walk away in defeat. Big bets they made that GameStop s stock would fall went wrong, leaving them facing billions of dollars in collective losses. All the wild action pushed GameStop s stock as high as US$380 on Wednesday, up from $18 just a few weeks ago. The stunning seizure of power gives some validation to smaller-pocketed investors, many of whom are encouraging each other on Reddit and are trading stocks for the first time thanks to brokerages offering free-trading apps. It s also left more investors on Wall Street asking if the stock market is in a dangerous bubble about to pop, as AMC Entertainment, Bed Bath & Beyond and other downtrodden stocks suddenly soar as well. The S&P 500 set a record high earlier this w
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