The stock price of GameStop turned Wednesday, rising above $ 100, but then fell in the last hour of trading to end the day with only 3% off Tuesday and well below recent highs. The hesitant stock price also suggests that WallStreetBets ’popular RedSit discussion forum that helped drive the previous period may be losing its magic to move the market.
The fall of GameStop followed a sharp cut in short interest on the stock, which measures how many of the company’s shares have been lent to sell. Many had pointed to this high level of short-term interest and so far that hedge funds had been cut and others betting against the video game retailer, as a reason why GameStop shares had skyrocketed.
GameStop shares ended Wednesday with just over $ 92 each, up 3% a day. The stock price had been as high as $ 483 just last Thursday, a drop of more than 80% in less than a week.
“These things can last longer than people expect, but when they disconnect they can disconnect pretty quickly,” said Ross Mayfield, Baird’s investment strategist. “When it comes to a completely speculative craze and game, someone will stick with the bag.”
The fall in GameStop shares, which fell 60% on Tuesday alone, could cause significant losses for some of the individual investors who had followed the positive stock market suggestions posted in WallStreetBets. The forum has grown in popularity last week and has grown to eight million members. GameStop shares hit a record high of $ 483 on Thursday amid chants of buy, buy, buy on social media.
Since then, the immersion in GameStop’s 81% share price has wiped out nearly $ 29 billion in the company’s stock value, which last week was $ 35 billion. On Tuesday that stock market value, or market capitalization, sank to $ 6.3 billion.
Stock prices of other companies that have received reinforcements on WallStreetBets rose slightly on Wednesday, after falling sharply the day before.
Shares of AMC Entertainment rose more than 10 percent to just under $ 9 on Wednesday. These shares, which fell 40 percent on Tuesday, had reached $ 20 last week. Shares of BlackBerry, which had risen to $ 28 last week, ended on Wednesday, after a slight rebound, to $ 12.
The acting chairman of the U.S. Securities and Exchange Commission, Allison Herren Lee, told NPR on Monday that the stock market regulator is studying different aspects of the sudden rise in GameStop shares, including whether brokers go act appropriately and if there has been any market manipulation. He also warned that companies were trying to raise money by selling shares at prices that appeared to be inflated by social media-driven traders and were unsustainable.
CBS MoneyWatch reported on Monday the moderators of the WallStreetBets discussion forum had recently detected a “large amount” of bot activity in the stock recommendation content being posted to their group.
Naked Brand Group, which sells underwear for both men and women, announced Monday that it had sold more than 29 million shares in a continuing bid of $ 1.70 each, raising $ 50 million for the company. . The company, based in Auckland, New Zealand, is in the process of closing all its stores in favor of online sales.
Shares of Naked Brand had traded as low as 7 cents each in November. In its bid document, filed with the SEC, the company said its share price had experienced “extreme volatility” in recent weeks. Price changes were said to appear to be driven by social media talks, as well as the company’s “short-term interest,” as well as other factors.
On Tuesday, shares of Naked Brand fell to 91 cents each, a 45% drop from Monday’s bid price. A Naked Brand spokesman did not return a CBS MoneyWatch request for comment.
—The Associated Press contributed to this report.