[ad_1]
GameStop shareholders are watching the heaps of cash flow in. But for how long?
CNET
Many of today’s young adults spent their youth in GameStop stores, lining up to buy new consoles, as well as buying and selling used video games. Now some of these people are making a fortune buy the shares of the company and encouraging their friends on Reddit to buy more.
While GameStop itself hasn’t fundamentally changed much over the past month, its stock has climbed over 9,700% – that’s not a typo. This dynamic has led Wall Street investors who bet against the company’s future to lose billions of dollars, and the excitement is drive the hype even further.
Over the past week, the financial world has been shocked by the rise of GameStop stocks to unthinkable levels. As of Wednesday afternoon, the stock hovered around $ 325 per share, against all-time lows of around $ 3.30 per share in the summer of 2019. Even Elon Musk tweeted about it, pointing to his $ 43 million. ‘subscribers to a Reddit community link investing in GameStop.
Read more: GameStop’s stock spike powered by slang from Reddit’s WallStreetBets community. This is what it means
“We are witnessing a phenomenon that I have never seen,” Jim Cramer, Wall Street commentator on CNBC and former hedge fund manager, said Monday. And GameStop might be just the start. “It’s crazy.”
It may sound like a strange story about Wall Street investors being overrun with enthusiastic social media users. For some, it was fun to watch these investors being taken to the cleaners by a group of people displaying rocket emoticons, claiming that GameStop’s stock would go “to the moon.”
Reddit users are betting they can take GameStop actions “to the moon.”
Getty Images
But for some on Wall Street, it’s the latest sign of how social media can disrupt everyday life. Twitter has changed the worlds of news and politics. YouTube and Instagram have transformed the fashion, beauty and entertainment industries. Now Reddit is taking on Wall Street.
These worlds also overlapped. Fans of Korean pop groups, known as K-pop stans, are posting floods of tweets about their favorite stars to overwhelm racist hashtags on Twitter. And TikTokers has banded together to try to sow confusion in President Donald Trump’s re-election campaign.
Now emboldened Reddit communities are talking about taking on other companies that Wall Street is betting heavily against. The Reddit crowd is already trying to push BlackBerry, the once popular handset maker that now focuses primarily on selling business software. And Redditors are also targeting struggling movie channel AMC, pushing its stock from around $ 2 a share to over $ 8 after hours. On Wednesday, it was hovering around $ 17 per share.
The actions of the Reddit community had such an impact that TD Ameritrade made the extraordinary decision to limit stock trading on Game Stop and AMC shares, “out of prudence in unprecedented market conditions”. The Nasdaq has also warned it will stop trading in stocks it believes are being manipulated by social media.
Meanwhile, traffic to the Reddit community at the center of the drama, WallStreetBets, is breaking records. WallStreetBets had 73 million pageviews for its discussion forums on Tuesday, according to a report from Mashable. Over the past week, it has reached around 700 million pageviews. Reddit is already the 46th most popular site on the web, with more than 78 million unique visitors in December, according to comScore.
But when the memes stop and the excitement wears off, GameStop will once again become that struggling video game retailer at a time when gaming is moving more and more into streaming and the idea of entering a physical store is still a big deal. agonizing prospect during a pandemic. At this point, equity analysts say, whoever owns stocks will see their value evaporate.
“It’s unnatural, insane and dangerous”, Michael Burry, a major GameStop investor and one of the subjects of the book and film The big court, wrote in a now deleted tweet. Its roughly $ 17 million investment in the company climbed to $ 250 million on Tuesday, Markets Insider reported.
Many gamers spent their childhood at GameStop.
Getty Images
Who is listening?
Michael pachter, a longtime video game industry analyst at Wedbush Securities, said he hasn’t even bothered to update his stock price expectations for GameStop since stocks started. went crazy last week. “Who’s listening?” he said. “Nobody cares what a sales analyst says right now.”
To him, there are reasonable explanations why people might be somewhat excited about GameStop. One of its new board members, Ryan Cohen, helped make Chewey one of the world’s largest online pet vendors, before selling it to PetSmart. GameStop is also on the right track to become profitable again.
But that doesn’t come close to explaining GameStop’s course of action now. “It’s a Ponzi scheme,” Pachter said, referring to a form of fraud that appears to make money but is in fact only supported by funding new investors. “There’s a time when it’s going to come down.”
He suspects this could happen after the company announced its quarterly results in March, when executives and board investors are allowed to sell their shares.
In the meantime, the social media hype continues on Reddit, where users declare their intention to buy and hold more GameStop shares, all to send prices even higher.
“My mom told me it was time to sell,” one Reddit user wrote in an article on GameStop’s stock moves. “Should I find a new mom?”
“Yes,” replied another user. “The answer is yes.”
See also: Why GameStop, BlackBerry stocks suddenly jumped, thanks to Reddit
[ad_2]
Source link