The GameStop Corp. logo on a smartphone and the Robinhood website on a laptop.
Tiffany Hagler-Geard | Bloomberg | Getty Images
GameStop, the poster for the recent speculative retail frenzy, fell below $ 50 every Tuesday as the sharp short cut occurred and investors made profits.
The brick-and-mortar video game retailer fell 20 percent to $ 47.81 a share on Tuesday after falling 80 percent last week from its worst weekly performance. Its all-time high on January 28, the shares were at $ 483 per share.
GameStop came into the spotlight two weeks ago, when an army of retail investors who coordinated operations on Reddit’s WallStreetBets forum increased shares by 400% in just one week. The short pressure induced huge pain in the hedge funds that bet against GameStop, while the mania forced several online brokers to limit trading on a number of highly volatile names.
According to data from S3 Partners, short interest in GameStop as a percentage of shares available for trading fell to about 50% on Friday from 130% two weeks ago. Therefore, most short bets have been covered and there is no significant force on the part of short sellers to continue to feed the pressure.
Trading volume also fell sharply this week as the momentum in retail slowed.
Some on Wall Street compare GameStop’s brief coup to that of Volkswagen in 2008, when the German manufacturer briefly became the world’s largest company.
Other actions that have seen increased speculative trading activities are also unknown. AMC Entertainment has fallen 20% this week after falling 48% last week. Koss has dropped 11% this week and 68% the week before.
Wall Street breathed a sigh of relief when the frenzy was limited to a handful of names and seemed to have run out. Many had worried that it could spill over into other areas of the market and have a more negative impact on investor confidence.
“We know financial conditions are supportive and investors have been more enthusiastic … But that doesn’t mean the stock market is in a speculative bubble,” said Kristina Hooper, Invesco’s global market strategist.
Subscribe to CNBC PRO for exclusive information and analysis and live scheduling of weekdays from around the world.