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A GameStop store in Emeryville, California, United States on Wednesday, January 27, 2021. The breathtaking rise of GameStop Corp. showed no signs of slowing down on Wednesday, with bullish day traders keeping the upper hand over short sellers who began to capitulate.
Photographer: David Paul Morris / Bloomberg
Photographer: David Paul Morris / Bloomberg
U.S. Treasury Secretary Janet Yellen and Administration Biden’s Economics Team Monitor Stocks market activity around GameStop Corp. and other heavily bypassed companies, White House Press Secretary Jen Psaki said.
“Our team is of course – our economic team including Secretary Yellen and others – monitoring the situation,” Psaki told reporters at the White House on Wednesday. She called the unusual trades at the video game retailer a “good reminder, however, that the stock market is not the only measure of the health of our economy.”
A spokesperson for the Treasury Department declined to comment.
A retail investor frenzy over the company has caused GameStop shares to skyrocket in recent weeks, squeezing hedge funds with large shorts in the company.
Shares of the video game retailer more than doubled as of 1 p.m. in New York City, triggering at least two stops in volatility as it recorded only one its largest intraday lead. GameStop grew eightfold in the past week, adding nearly $ 20 billion to its market value.
Read More: GameStop Rally Reaches New Extremes As Short Sellers Go
GameStop’s meteoric rise has enthralled Wall Street, as an army of small traders encouraged by the messages on the Reddit bulletin boards pushed the company’s stock price to unheard-of levels. The company’s shares started the year at just $ 19. Hedge funds that held short positions on GameStop, such as Melvin Capital, closed its doors as the rally continued, suffering billions of dollars in losses.
While some commentators have called the frenzy a populist uprising against Wall Street institutions, others see a dangerous game that could potentially expose investors to significant losses. Some have questioned whether this was the result of deliberate market manipulation.
Earlier: Michael Burry calls GameStop Rally ‘unnatural, crazy’
Investor Michael Burry, who previously defended GameStop in 2019, called the current phenomenon “unnatural, insane and dangerous”.
“What’s happening now – there should be legal and regulatory implications,” tweeted Burry, who rose to prominence for his bet against mortgage-backed securities before the 2008 financial crisis.
Burry’s tweet identified the Enforcement Division of the Securities and Exchange Commission.
– With the help of Christopher Condon and Scott Lanman
(Updates with the Treasury commentary in the third paragraph.)
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